THE
From
1996
Textiles
NEWCOMEN
PRIZE
to Automobiles:
ESSAY
Mechanical
and
OrganizationalInnovationin the
Toyoda Enterprises,1895-1933
William
Mass 1
CenterJ½r
Industrial
Competitiveness
University
ofMassachusetts,
Lowell
Andrew
Robertson
HarvardUniversity
The storyof SakichiToyoda(1867-1930),the greatindustrialentrepreneurand nationalhero,is taughtto everyJapanese
schoolchild.Foreign
touristsaretoldhe wastheJapanese
ThomasEdison.As recentlyas1985,the
patentofficelistedSakichi
Toyodaasoneof thetenmostimportantinventors
inJapanese
history.The textilemachinery
company
thathe foundedeventually
gavebirthto theToyotaMotor Corporation.
BeforetheJapanese
stockmarket
bubble burst, the Toyota Motor Corporationcommitted150 billion yen
(roughly$150million)for therecentlycompleted
ToyotaIndustrialMuseum,a
remarkablywell-donepa:anto a visionof socialprogressas technological
progress.
What is lackingis a senseof the criticaland essential
role of social
organization,without which the determinantsand consequences
of tech~
nologicaldevelopment
will be misunderstood.
This paperexploresboth the
organizational
and the technological
aspectsof earlyToyodaentrepreneurial
historyfor insights
into the foundations
of Toyota'spostwarperformance
and
potentialimplications
for economic
development
moregenerally.
• The authorswould like to thank Qiwen Lu and Damian Kieran for their excellent
research
assistance.
In addition,we wouldlike to thankour colleagues
TakeshiAbe, Eisuke
Daito,KazuoWada,andparticularly
HideaMMiyajimafor helpfuldiscussions
and for their
assistance
in securingJapanese-language
materials.All of them are exempt from any
responsibility
for our errorsof omissionand commission.
The international
collaboration
thathassupported
thisresearch
hasbeenfundedby theSocialScience
Research
Counciland
the National Science Foundation. Some of the research was conducted while William Mass
wasa HarvardNewcomenFellow,and partsof thispaperwerepresentedto the Harvard
Business
HistorySeminarin a paperco-authored
with HideakiMiyajima.An earlierversion
of thispaperwaspresented
at the"Symposium
on Industrial
Development
andInternational
Competition"
at theSuntoryandToyotaInternational
Centresfor Economics
andRelated
Disciplines,
LondonSchoolof Economics
andPoliticalScience,
January
4-5, 1996.Finally,
we want our readers to be aware that in this draft we have followed Western convention in
placing
Japanese
surnames
lastin thetext,butfirstin listingbibliographic
references.
BUSINESSAND ECONOMIC HISTORY, Volume
Twenty-five,
no.2,Winter1996.
Copyright
¸1996 bytheBusiness
HistoryConference.
ISSN0849-6825.
2 / WILLIAM MASS & ANDREW ROBERTSON
In TheTechnological
Trans•vmation
ofJapan:FromtheSeventeenth
to the
T•ven•y-First
Century,
TessaMorns-Suzuki
citedthesurprising
claimof a leading
interwar
Japanese
technologist,
thedirector
of thepioneering
RIKEN Institute
MasatoshiOkochi that "Japanese
researchers
were skilledand original
inventors,but that Japan'sweakness
lay in an inabilityto commercialize
radicallynew ideas"[pp. 116-7].Okochi'sconcernwas thatJapanese
firms
wouldmorereadilychooseto refineimportedtechnologies
wherea market
wasalready
developed,
ratherthanto bearthegreateruncertainty,
associated
risk,andheavydevelopmental
costsof takinga moreradicalinnovation
from
laboratorybench to full-scaleproduction.Morris-Suzukipoints to the
exception
thatprovestherule,by discussing
"theclassic
example
of Japanese
innovation":
theToyodaLoomWorksestablished
by SakichiToyodain 1906,
and his son Kiichiro,who, drawingon his universitytraining,put in place
systematic
and costlylarge-scale
researchand extensive
prototypeand mill
testingto refinehisfather's
inventions.
In a recentpaperon "The LearningProcessand the Market:The
Japanese
CapitalGoods Sectorin the Early TwentiethCentury,"Tetsuro
Nakaokautilizedthe conceptof appropriatetechnologyto describethe
possibilities
earlyin the industrialization
processfor indigenously
developed
technological
leaps.For instance,
domesticcapitalgoodsproducers
canserve
nichecapitalgoodsmarketsthat supplymachineryto localmanufacturers
producing
traditional
products.
Thesesectors
arepoorlyservedby expensive
and (for theixpurposes)
inappropriately
designed
and specifiedcapitalgoods
producedin developed
economies.
The indigenous
innovations
reinforceand
accelerate
development,
simultaneously
alteringpreviously
existingconditions
and openingnew opportunitiesfor "quantumleaps in technology"for
indigenous
capitalgoodsproducers.
Nakaokanotesl"Onetypicalexample
of a manufacturer
whomadethis
leapsuccessfully
is theToyodaLoomWorks"[Nakaoka,1994,p. 13].Nakaoka
citesthree"quantumleaps"initiatedby Sakichiin narrowloom, ixonbroad
loom, and automaticloom invention,the latterrefinedby Kiichixo.Given the
ongoingchanges
in economicconditions
that accompany
successful
development,Nakaokastressed
the needfor recurringor continuous
technological
leapsto sustainthe development
process.
Eachsuccessive
technological
leap
requkedupgraded
andmoreexpensive
equipment
andengineering
know-how.
Nakaoka identified insufficientcapital resourcesas the most general
impedimentand barrierto sustained
development.
Decidingwhereand how
bestto deployfinancialresources
aimedat "quantumleaps"in technology
requkesdeepknowledgeof the adequacy
of the platformfrom which one
attemptsto leap,the resources
neededto helpbridgethe gap,anda strategy
for theix effective mobilization.
Thispaperdescribes
howtheToyodaenterprises
achieved
international
competitiveness
in textilemachinery
production.
It elaborates
on andsupplementstheassessments
of Morns-Suzuki
andNakaokaby addressing
questions
about the relation between Sakichi and Kiichixo's mechanical innovations and
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933/ 3
the technology
readilyavailablefrom foreignmachinerysuppliers;
the extent
and characterof indigenous
Japanese
innovations
in textiletechnology;
the
relationshipof strategicchoicesand innovationsin both technologyand
organization;
and the riseof Japanese
industrialleadership
asreflectedin the
negotiations
over technology
transferand a proposedmergerbetweenPlatt
Bros.and two Toyodaenterprises.
Collaborative
research
reportedelsewhere
addresses
relatedquestionsabout the role of industrialorganizationand
nationalinstitutionsin alteringthe strategicoptionsavailablefor Japanese
textileandtextilemachinery
enterprises
[LazonickandMass,1984,1995;Mass
andLazonick,1990;MassandMiyajima,1993].
The insightsof Morris-Suzuki
and Nakaokahighlightthe unevenness
anddiscontinuity
of organizational
development
andtechnological
achievment
in the processof economicdevelopment.
The mostimportantand fundamentalfeatureof Japan's
interwargrowthwasthecharacter
of andrelationship
betweendevelopment
in both 1) exportsectors,
primarilylightindustries
and
especially
cottontextiles,
and2) importsubstitution
in heavyindustries.
'Asa
casestudy,thispaperstrives
to buildanunderstanding
of theunevenevolution
of organizations
and the "leaps"towardinternational
technological
competitiveness
in cottontextilemachinery,
thekeyto long-termcottontextileexport
success,
aspart of a continuous
and cumulative
developmental
process.
We
aimto presentanintegrated
viewof elements
of continuity
anddiscontinuity
in the dynamicsof Japanesetechnologytransferand developmentand in
particular
to illuminate
thefollowing
phenomena:
ß
Finance
and
Markets
-
The
critical access to finance and markets
providedby Toyoda'ssustained
relationship
with the leadinggeneral
tradingcompany
MitsuiBussan,
andwithindividual
Mitsuimanagers,
was
periodically
strained
asentrepreneurial
initiatives
required
anindependent
development
path.
ß Long-Term Relationsto Key Technologist$and TechniciansTherewasa remarkable,
andgenerally
unknown(at leastin the West),
rivalrybetweenthe first and secondenterprises
established
by Sakichi
Toyoda(ToyodaLoomWorksandtheToyodaAutomatic
LoomWorks),
whereinhe sustainedrelationships
of mutual supportwith key
technologists
fromthecompany
he formerlymanaged.
ß ProductDevelopmentand Manufacturing- Toyodaplayeda leading
role in pioneering
the introduction
of the Americansystemof interchangeable
partsintoJapanese
manufacturing,
essential
to thecommercial
success of mechanical innovations.
ß
Inventionand OrganizedIndustrialResearch- Organized
industrial
research
playedan earlyandleading
roleat Toyoda(andwe reassess
the
character
and relativeimportance
of the accomplishments
of Kh'chixo
relativeto hisfatherSakichi).
The centraltechnical
innovations,
embodied
in the Toyoda automaticloom, resultedin successful
pioneering
commercialization
of automatic
weavingmachinery
in competition
with
both importedtechnology
and indigenous
rivalsbecausethey were
4 / WILLIAM MASS & ANDREW ROBERTSON
appropriately
designed
to suitJapanese
textileandmachining
capabilities,
and theyintegrated
designwith the development
of superiorToyoda
ß
ß
ß
ß
manufacturing
capabilities.
SocialOrganizationand Individual EnterpriseDevelopment- The
breadthanddepthof theJapanese
effortsto developindigenous
textile
technology
prompted
widespread
competition
andsimultaneously
promoted
the development
of humanandtechnical
resources
thatrivalssoughtto
mobili7.e
for theirownpurposes.
At the sametimeToyodaenterprises'
strategy
andstructure
ledto theirrelative
domination
of theirrivals.
TechnologyTransferfromJapanto Britain - We describe
the nature
and sources
of tensionbetweenPlattBros.andthe ToyodaLoomWorks
thatreflectedthe factorsundermining
PlattBros.'effortsto manufacture
andsellautomatic
weaving
technology
developed
andlicensed
fromToyoda.
The Rise of New Industrial Leaders- Finally,the unexpectedand
ultimately
failedirfifiafives
by MitsuiBussan
to mergePlattBros.withthe
ToyodaLoomWorksandtheToyodaAutomaticLoomWorksreflected
the changing
relationships
andtheirperception
amongall four partiesas
theJapanese
industrial
faTnsattained
intemafional
competitiveness.
TechnologyTransfer acrossIndustries- The deep and long-lived
rootsof Toyoda'scorporateculturesupported
its success
in transferring
existingcapabilities
into and buildingnew capabilities
for the emerging
automobileindustry,evenin the faceof promisingreturnsto continued
investmentin areasof currentstrength.
An Introductionto the Early History of ToyodaTextile Enterprises
In 1885,SakichiToyodaparticipated
in an eveningstudygroupwhere
he leamedof the newlyenactedPatentLaw andwassaidto havesethisgoal
on inventionas an avenueto contributeto nationaldevelopment.
Having
grownup in a traditional
textilemanufacturing
region,Sakichibeganhisefforts
at developingsuperiorhand loomsin 1887. Sakichiattendedthe Third
NationalIndustrialExhibitionin Tokyo in 1890 and viskedthe machinery
pavilioneverydayfor two weeks.Duringthe followingyearhe patentedhis
firstwoodenhandloominvention.
Sakichi's
technical
advance
involvedlinking
the flyingshuttleto the movementof the reedwhenbeatingdownthe weft.
This firstinventionalloweda productivity
increase
of 50percent compared
with otherindigenous
loomsin use.But the woodenhandloom was not a
commercial
success;
at aboutthe sametimea flying-shuttle
attachment,
called
a "battan," was introducedfrom France which could be attachedat much
lower cost than a Toyodahand loom and offeredcomparable
efficiency
[Kobayashi,
1995, p. 16].
Sakichibuilt four or five of his patentedloomsin a smallweaving
factorythat he established
in theTokyoarea.His endeavor
coincided
with a
periodof slacktrade,however,andSakichihadreturnedto hisvillageby the
end of 1893. As a meansto generatethe revenuenecessary
to finance
INNOVATION IN THE TOYODA ENTERPRISES, 1885-1933/ 5
continued
loomexperimentation,
Sakichi
invented
a yarn-reeling
machine,
a
deviceforwinding
yarn.Hisfeelerproduced
constant
lengths
of yarntwiceas
efficiently
asconventional
devices.
He relocated
theweaving
factory
andretail
outlet,ToyodaShoten,
to Nagoyaandopened
theIto RetailStoreasa sales
outletfor the feelerin 1895.Sakichi's
secondwife andhis youngerbrother
Heikichimanaged
the storeandfeelersales[Toyoda,1967,p. 28; hereafter
whenonlypagenumbers
aregivenin brackets,
thesource
isToyoda,1967].
Sakichiinventedhis f•rst successful
narrowwoodenpower loom in
1896andgarnered
muchindustry
attention.
Alongwith a reelingmachine
customer,Tohachi Ishikawa,Sakichiestablishedthe Otokawa Weaving
Company as a partnership.Sakichi'scapitalcontributionconsistedof
60Toyodawooden
powerlooms.
By1898a weaver
couldoperate
twoor three
Toyodasteam-powered
loomsinstead
of a single
conventional
loom.Productivityin the modernized
mill increased
four-fold,clothqualityimproved,and
costsfellby over50 percent.
In orderto advance
hisloomexperimentation,
Sakichialso established
an independentpilot plant in Nagoya running
36 powerloomsasa basisfor gainingmanufacturing
experience
[p. 32].
In 1899Kamenosuke
Fugino,the MitsuiBussan
mainbranchmanager
for the Divisionof CottonYarn andCloth,inspected
the operating
Toyoda
powerloomsandevaluated
the prospects
for theirmassproduction.
Mitsui
negotiated
anexclusive
ten-year
contract
withSakichi
for producing
andselling
powerlooms.The Igeta Trading Companywassetup asthesalesagent;its
top managers
camefrom the Nagoyabranchof MitsuiBussan,and Sakichi
Toyodabecamethechiefengineer
responsible
for improving
thepowerloom
[pp.34-40].
This f•rstToyodapowerloom foundinitialsalessuccess
with small
manufacturers
weavingnarrow cloth for such export marketsas Korea,
Manchuria,
andTaiwan.Toyoda's
loomswereeasierto maintainandmuchless
expensive
thanthoseof theprimaryforeigncompetitors
[p.47;Toyota,1988,
p. 28]:
Table _1:Pricesof Narrow Power Looms, 1899
LoomManufacturer LoomPrice(inyen)
Hartmann, German
Diedrichs,French
Toyoda
872
389
93
The most importantachievement
of Sakichi'scontinueddevelopment
effortswasa patentedlet-offdevicethat maintained
the warpat a constant
tensionasit wasbeingfed off the warpbeam.In addition,and for the f•rst
time, he turnedhis attentionto the developmentof a loom that would
automatically
replenishthe weft yarn when the yarn on a bobbin was
exhausted.
Againfacingpartnersconcerned
aboutbusiness
solvency
during
cyclicaldownturns,Sakichiresignedfrom the Igeta Trading Company,
disappointed
by thelackof financialsupportfor hiscontinued
loomdevelopment. Sakichireturnedto the Toyoda Shotenand renamedit Toyoda
6 / WILLIAM MASS & ANDREW ROBERTSON
Trading Company(ToyodaShokai)
whichabsorbed
the formerIto Trading
Company.
He openedan independent
clothmill running138powerlooms.
His wife and his youngerbrotherSasukemanagedthe ToyodaTrading
Companyand the mill, so that Sakichicouldonceagainturn to his loom
experiments
[p.40;Toyota1988,pp.28-29].
Sakichinext inventedan automaticshuttle-changing
devicethat was
attachedto narrowpowerloomsin 1903.Althoughthe initialeffortwasnot
successful,
MitsuiBussan
wasinterested
in financing
theestablishment
of the
Nagoya Weaving Company, with 150 looms equippedwith Sakichi's
automaticattachments
for furtherexperimentation.
Lackingthe capacityfor
loommanufacturing,
Sakichicontracted
with KimotoIron Works,a firm with
experience
in manufacturing
textilemachine
parts[Suzuki,
1994,p. 155].
Kanegafuchi
CottonSpinning
Company
(a forerunner
of Kanebo,Ltd.,
one of the three dominantintegratedspinningand weavingfro-ns)was
interestedin developingSakichi'sautomaticloom for the manufactureof
broadclothfor export.Althoughstillat an earlystageof loom development,
Sakichiagreedto allowthe companyto utilizehis patenteddevices
because
Kanegafuchi
promised
to licenseandmanufacture
Sakichi's
loomif it proved
successful.
Kanegafuchi
re-equipped
its powerloomswith automaticshutdechanging
mechanisms
designed
by Sakichi.The underlying
business
relationshipwas probablywith Mitsui Bussan,whichwould normallyhave been
responsible
for marketingand sellingthe automaticlooms.However,Mitsui
was restrictedin its public actionsbecauseof its role as the exclusive
representative
of PlattBros.in Japan.(Thepressures
leadingto changein the
Mitsui-Plattrelationship
will be discussed
in a latersection.)
Kanegafuchi
setup a mill experiment
to comparethe performance
of
50 ToyodaTradingCompanyloomswith 44 PlattBros.powerlooms,ten U.S.
Dra.perbobbin-changing
automatic
looms,andsixKip Bakerlooms(English
loomswith warp-stopmotions).After a one-yeartrial,all the automaticlooms
provedto be unsatisfactory
in operation,
whereasthePlattBros.powerlooms
werea success.
Sakichiand the ToyodaTradingCompanysufferedfinancial
lossesin providingmaterialsupportfor this experiment.
Sakichidrew two
lessons
fromthisexperience:
Fisst,he becamefullycognizant
of theextentof
foreigncompetition
he confronted
ashe viedto introducean automatic
loom
into theJapanese
market.Second,from then on, Sakichisupervised
testing
undermill conditions
whendeveloping
allhismechanical
innovations
[pp.4143;Toyota,1988,pp.29-30;Suzuki,1994,p. 155].
In reviewing
the experience
of producing
clothwith Toyoda'snarrow
automatic
looms,the headof MitsuiBussan's
NagoyabranchofficeOkano
Teiji recountedthe problemsresultingfrom the poor qualityof loom
manufacturing
and the complexityof the loom'smechanisms:
"Becausethe
techniques
usedin thismachine's
manufacture
arenot advanced,
it doesnot
operateasit should...(I)tis not a simplemachine,
it givestheworkersmany
problems.
Moreover,
it requires
a longtimeto gaintheskillnecessary
to useit"
[Suzuki,1994:p. 156].
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933 / 7
Recognizing
the lengthydevelopment
periodnecessary
to constructa
competitiveautomaticloom, Sakichiturnedhis attentionto raisingthe
investment
fundsrequiredfor continued
automatic
loomexperimentation.
He
renewedhis focuson the development,
manufacture,
andsaleof the power
loom.By 1905he hadinventeda higherperformance
iron andwoodnarrow
loom,theModel38 powerloom(namedfor the38thyearof theMeijiperiod).
In additionto its greaterdurability,
at 85 yenthe iron 38 loomwastwiceas
expensive
asthe earlierall-woodframemodel.A weavercouldoperatesixor
sevenModel38 loomscompared
to onlytwo or threeof the earliermodels
[Suzuki,1994,p. 157].
The following
yeartwonewloommodelsweremarketed:
theModel39
powerloom,usedfor weavingcoarseyarn,anda ModelL, "simplified"
light
loom(kei-ban)for narrow,thin-weave
cottonandjutefabrics.With the assistanceof MitsuiBussan's
Osakabranchmanager
Kamenosuke
Fugino,Sakichi
secureda loan of 130,000yen from MitsuiBussanto financeexpansion.
In
1906in an areawithinNagoya,Sakichiestablished
the ShimazaldFactory,
consisting
of botha weaving-machine
factorywith a production
capacity
of
150 powerloomsper month,and a pilot cloth factory.The salesrecord
summarized below confirms the looms' commercial success as the Shimazaki
Factorywasoperating
nearcapacity
[47-48;Toyota,1988,p. 28].
Table 2: SalesSummary1905-March,1909
Loom Model
Sales
38
947
39
2,307
L (kei-ban)
4,201
Concernedabout sustaining
ToyodaTradingCompany'sstrongfinancial
foundation
intothefuture,
Sakichi
began
recruiting
technically
ableemployees.
In 1903 he hired two engineering
university
graduates
(Kogakshi),
two
graduates
from a post-secondary
technical
education
program(Kotokogyo),
andsevenor eighttechnical
highschoolgraduates
[49].Sakichi's
recruitment
of suchhighlyeducated
employees
wasvery exceptional
amongsmall
proprietorships.
The success
of Toyoda's
powerloomwasevidentas earlyas 1906,
whenFuginovisitedSakichi
andhisproduction
facilityandrecommended
that
Toyodaconvertto a joint-stock
company.
Sakichi,
reportedly
resistant
at first
to sharing
control,but awareof the importance
of his relationship
to his
creditors,
agreed
to incorporation
to secure
large-scale
œmancing
andcooperated in establishing
the Toyoda Loom Works (Toyoda-shiki
Shokki
Kabushiki
Kaisha).The president
of the ToyodaLoomWorkswasFusazo
Taneguchi,
whowasalsothepresident
of thegiantspinning
firmtheOsaka
Spinning
Company.
Sakichi
wastheoperating
manager
of theToyodaLoom
Works.SeishuIwashita,an importantarranger
in the business
world,was
amongthe other top managers,
and additionalconsultants
includedthe
renowned
TakeoYamanobe
(mostcloselylinkedwith the OsakaSpinning
8 / WILLIAM MASS & ANDREW ROBERTSON
Company)and Fugmoof MitsuiBussan.
The ToyodaTradingCompany
ceased
operation
[pp.50-51].
The capitalinvestments
in the ToyodaLoom Workswere madeby
fmancialleadersin Tokyo,Osaka,andNagoya[lzumi,1980,p. 18].Though
Sakichi
andHachirojiro
Mitsui,thepresident
of MitsuiBussan,
werethelargest
shareholders
with 5 percenteach,therewere 143 additionalshareholders.
Sakichi's
managerial
controlwasconsiderably
diluted[Yamazaki,
1987,p. 47].
Toyodasoldmorepowerloomsthananyof itsdomestic
rivals,andthe
ToyodaLoomWorkssoonbecame
dominant
in thenarrow-cloth
powerloom
marketsegment,
servicing
smallandmedium-sized
clothmillssellingto the
domesticmarket.Its leadingpositionemerged
with its pioneering
improvementsin manufacturing
methods,
andtheToyodaLoomWorksquicklyturned
to the challenge
of broadloomproduction
andthe directchallenge
of the
dominantforeignloomsuppliers.
Sakichiturnedto the task of developinga wide loom suitedfor
integrated
millsproducing
broadclothfor exportmarkets.He developed
the
H-model,an all-ironwidepowerloomin 1908.Sakichirealizedthe H-model
loom had to be made of metal to be able to withstand the increased vibration
resulting
fromthegreaterloomwidth.All previous
attempts
at manufacturing
a workablewidepowerloomhadfailed,mainlybecause
Japanese
machining
capabilities
were inadequate
for producingsufficiently
accuratecomponent
parts[p. 52].
The Introductionof the AmericanSystemand the Originsof Advanced
Manufacturing in Japan
At the first generalmeetingof the ToyodaLoom Worksin 1907,
president
Taniguchi
explained:
It is most regrettablethat at the presenttime we still do not have
sufficientequipment
to completely
manufacture
this Ioom...The
iron framenarrowloomsinstalled
at NagoyaClothwereprovided
byToyodabutweremanufactured
at theOsakaKimotoIron Works
asourShimazaki
Factoryis incomplete.
The poorresultsstemfrom
a failure in the manufacture of the loom. As a result of these failures
and accidents,the Toyoda Loom and its associated
patented
equipment
reached
a stage
in whichit isunwanted.
Not onlyNagoya
ClothCompanybut at othercompanies
usingToyoda'siron frame
loom,theresults
areuniformly
bad.
The problemsat KimotoIron Workswerenot uncommonamong
manufacturers
of iron powerloomsin othercountries
aswell asin machine
manufacturing
elsewhere
in Japan.The KimotoIron Workswasnot engaged
in themanufacture
of interchangeable
parts.Almostno twomachines
usedin
the manufacturing
processwere alike. In large-scale
operationslooms
inevitably
brokedown.Withoutinterchangeability,
eachbrokenpartrequireda
newpieceto be specially
made[Suzuki,1994,p. 161].
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933 / 9
Sakichi's
searchfor solutions
andimprovements
ledhimto hireCharles
A. Francis,an Americanteacherof mechanical
engineering
at the Tokyo
HigherTechnicalSchoolwho hadalsobeenemployedasan engineerfor the
Pratt and Whitney Company.From 1905 to 1907, Francishad provided
guidance
at aJapanese
leadingmachinetoolcompany,
IgekaiIronworks,where
he "trainedworkersin the basic techniquesof machinemanufacture,"
including
"theuseof indicators
andgauges,
thecuttingof highprecision
gears
andscrews,
andtheadjustment
of themain[lathe]
spindle...
[Hieintroduced
to the companybatchproductionof standard
models.He taughtengineers
about...thedesignof jigsand fixtures,and the layoutof equipment
on the
productionline," and advisedmanagers
on essential,
high-quality
machine
toolsto consider
purchasing
[Nakaoka,
pp.25-26,1994].However,the Igekai
Ironworks
lackedtheresources
to implement
the full planfor reorganization
andwithina halfa yearFrancis
wasdismissed
[Suzuki,
1994,p. 162].
In confronting
thedifficulties
withthemanufacture
of Toyodaloomsat
the Kimoto Iron Works foundryin particular,Francisredesigned
'tools,
developed
standardized
specifications,
thoroughly
standardized
thegauges,
and
drewup an overallplanfor the factory.Whenthe management
at Toyoda
Loom Works provedreluctantto pay Francisthe full salarySakichihad
promised,
Sakichihadthemdeducttherequired
amount(halfof Francis'pay)
fromhisownsalaryaschiefengineer
andexecutive
director.
Beforeaddressing
manufacturing
methodsat the KirnotoIronworks,
Francisfirstdesigned
anddirectedthe construction
of a machinetool manufacturing
plantthatproduced
lathesandothertoolsrequired
in production
in
1907.Other than a singletool installedby the IkegaiIronworks,all the
machinery
installed
in the factorywasthemostmodernironmachinery
from
England,Germany,andthe UnitedStates.
With thisequipment,
the factory
madethe approximately
300 gauges
requiredfor loomproduction.
With its
own tool factory,Toyodacouldestablish
a systemof standards
and begin
manufacturing
interchangeable
parts.Workerswere trainedin accordwith a
newdivisionof labor,endingthe craftorganization
of manufacturing
where
skilled metal workers made, owned, and used their own tools. The
commitment
to establishing
newtechnological
capabilities
wasreflected
in the
decision
to forgopayingout dividends
to shareholders
[p. 61; Suzuki,1994,
pp. 162-63].
The ToyodaLoomWorkssoondeveloped
a seriesof newiron-frame
modelsfor both narrowlooms(theK modelin 1908andthe moresuccessful
L modelin 1909)andbroadlooms(modelH in 1908).TheseToyodaironframeloomsweremassproduced
at thefactory
thatFrancis
designed,
thefirst
productionsystememployingmodernengineering
technology
in Japan
[Toyowa,
1967,pp.8-11].
Two newfacilities
weresoonestablished.
Because
the pilotweaving
plantat Shimazaki
hadbeenconverted
to a warehouse,
Sakichisoughtto
establish
a newexperimental
factory.
He builtanother
pilotweaving
factory,
theToyodaKikui WeavingFactory,asa shopindependent
of theToyoda
10 / WILLIAM MASS & ANDREW ROBERTSON
LoomWorks.Sakichi's
brother,Sasuke,
managed
the newclothmill testsite
[p. 52]. They initiallysubcontracted
their iron work to Kimoto,but a new
castingfoundrywasestablished
in 1908.New and higherqualitystandards
werenecessary
to achieve
interchangeability,
but theworkerssoughtto meet
quantity
outputgoals.Conflicts
alsoemerged
amongthemanagers
responsible
for meetingthe new qualitystandards
and for implementing
new work
organizationand practices.Despitesignificantturnoverof both managing
engineers
andworkers,theToyodaLoomWorkssoondeveloped
a loyalgroup
of engineers
and workerswho achievedinterchangeability
of partsand who
differentiated
theirpractices
from the restof the metal-working
industry.At
leastin part becauseof thesechanges,
Toyodawas able to doublefactory
outputbetween1908and1910withoutincreasing
itsworkforce
[Suzuki,
1994,
pp. 166-68].
Start-upproductionproblemsand difficultiesin operatingToyoda
loomsundermill conditions
promptedMie Spinning(latermergedinto Toyo
Spinning)to senda technicalmanagerto inspectthe operationof Toyoda's
pilot factory in October 1909. Three Mie directorshad been major
stockholders
from the startof theToyodaLoomWorks.Underthe direction
of an ImperialUniversity-trained
engineer,AisaburoMano, the Mie textfile
engineers
andoperatives
with experience
in operating
importedlooms(both
automatic
andnon-automatic)
madeimprovements
in thenewmodelToyoda
looms they tested.Toyoda'swide iron power looms were evaluatedin
comparison
with Platt Bros.looms,and the resultsdemonstrated
no overall
performance
difference
betweenthem.In 1913thepriceof theToyodabroad
loomwas160yen,20 percentlessthanthe costof a comparable
imported
loom.With ordersforwideloomsbeginning
to arrivefromintegrated
spinning
companies,
a turningpoint had beenreachedin the international
competitiveness
of theToyodalooms[p.59;Suzuki,1994,p. 165].Not surprisingly,
this earlyperiodof new productand processdevelopment
was rife with
customercomplaintsfrom both mills purchasing
narrowlooms and the
growingnumberof mills orderingwide looms[Toyowa,1967,pp. 10~12].
Continueddifficulties
in manufacturing
exacerbated
a developing
rift between
Sakichiandpresident
Taneguchi.
By 1910the highdevelopment
costsandthe investments
requiredto
scaleup production
showed
promiseof reaping
substantial
returns,
but much
of the periodfrom 1907leadingup to World War I wereyearsof relatively
sloweconomicgrowth.Still,from the secondhalf of 1910,ToyodaLoom
Worksbeganpayingdividends
to its stockholders.
The rift emerging
between
Taneguchi
andSakichi
deepened,
astheydisagreed
abouttheappropriate
scale
of R&D expenditures.
Extensive
mechanical
testing
in particular
required
large
capitalinvestments.
As a result,Sakichiresignedfrom the companythat was
builtuponthecommercialization
of hisinventions
andthatcontinued
to carry
hisnameafterhisdeparture
[p.62;Suzuki,
1994,
p. 168].Alffiough
Sakichi
Toyodaendedhis formalmanaging
relationship
with ToyodaLoomin 1910,
he in fact continued
as a directorevenafterhe established
a rivalcompany.
INNOVATION IN THE TOYODA ENTERPRISES, 1885-1933/ 11
More important,Sakichicontinuedto provideguidance,especially
during
difficulttimes,to theToyodaLoommanaging
engineers
he hadputin placein
thecasting
facility.
The ToyodaLoom Workscontinueddevelopment
of the iron broad
loom and its productioncapacity.AisaburoMano of Toyo Spinningand
SakichiToyodaprovidedcrucialguidance- the formerin productdevelopmentand the latterin manufacturing
- to ensureToyodaLoom Works'
success.
Difficultiesin coordinating
large-scale
testingof narrowloomsat
NagoyaClothCompany
promptedtheamalgamation
of thetwo companies
in
1913 and the subsequent
re-equipping
of both facilitieswith wide looms.
Assistedby AisaburoMano, now the manufacturing
supervisorof Toyo
Spinning,
ToyodaLoomWorksdeveloped
an English-style
iron wide loom
thatwasdelivered
to Toyoin 1914and1915.The success
of thisN-typeof
broadloomledto thevirtualcessation
of loomimportsinJapanby 1920.
MitsuiBussan's
Fuginorepeatedly
urgedthattheKimotoIronworksbe
the nextfactoryto introduce
interchangeable
partstechnology,
a goalthatit
fitfullyattempted
andeventually
fullyachieved
undernewmanagement.
The
combinationof Kimoto'songoingfinancialdifficulties,continuingsupply
problems
confronting
ToyodaLoom,andToyoda's
needfor expanded
productioncapacity
ledMitsuiBussan
to mediatetheacquisition
of Kimotoby the
ToyodaLoomWorksin 1916.The coregroupconnected
to Sakichi
Toyoda,
including
the chiefengineer
(FuguroTsuchiya),
the headsof design(Iwataro
Okabe)and castingoperations
(ChotaroKubota),and key technicians
at
ToyodaLoomwerereassigned
in similarcapacities
to theKimotoIron Works
[Suzuki,
1949,p. 150;Suzuki,1994,pp. 166-70;
Toyowa,1967].
2
A surveyof theinstalled
stockof 49,354loomsin integrated
spinning
companies
in 1920identified63 percentof foreignorigin(two-thirds
of which
were from Platt Bros.),and out of the 36 percentof loomsthat were
domestically
produced,
over90 percentof theseweremadeby theToyoda
Loom Works [Yanagihara,
1979,p. 43]. Table 3 providesevidenceof the
increased
success
of the ToyodaLoomWorksafterBritishimportswere
interruptedby World War I [Yanagihara,
1979, pp.52-53].International
competitiveness
wassecured
on thebasisof loommodelsdeveloped
andof
manufacturing
capabilities
attained
afterSakichi's
officialdeparture,
evenasthe
company
reliedon hispatented
inventions
andhisunofficial
guidance
of key
manufacturing
personnel.
2Oneimportant
consequence
of themerger
wasthedeparture
of KimotoIronWorks'chief
engineer
FuguroSakamoto,
andthelaunching
of hiscareertowardbecoming
the headof
EnshuLoom,thechiefrivalof ToyodaAutomatic
Loom.The history
of EnshuLoomwill
bebrieflydiscussed
below.
12 / WILLIAM MASS & ANDREW ROBERTSON
T•ble 3.' ToyodaLoomWorks,LoomSales
Total
Year
Number
of
Classification Type
Developed Construction LoomsSold
Narrow Width
A
1907
Wood-iron
Narrow Width
K
1908
Iron
Narrow Width
L
1909
Iron
Broad Width
G
1907
Wood-iron
Broad Width
N
1914
Iron
87,114
Broad Width
L.T
1932
Iron
901
Total
1,846
213
15,247
70,908
Total
Total as of October 1935
180
92,554
163,462
Learningfrom a Trip Abroad
On May 8, 1910Sakichialongwith hischildhood
friendandemployee
Akiji Nishikawa,
a practical
textilemill engineer,
departedon a tourof textile
districts
in the UnitedStatesandEurope.After arrivingin New York, Sakichi
wastakenaroundto textilefacilities
surrounding
Boston,New Bedford,Fall
River,Providence,
andWorcester
by the New York-based
machinebranch
managerof Mitsui Bussan.Sakichigainedconfidence
from evaluating
the
construction
andoperationof Americanloomsin lightof whathe hadlearned
from his own factoryexperiments
and inventions.
In comparison,
the
Americanlooms' speedof revolutionwas slower,the vibrationlevel was
higher,theDraperbobbin-changing
mechanism
wastoo complicated,
andthe
highrate of warp breakage
resultedin an unsatisfactory
numberof cloth
defects[pp.63-64].
Believing
thattheinvention
of a competitive
automatic
loomhadhigh
worldwide
value,Sakichi
hadIshibara,
a technical
expertfromJapan,
joinhim.
Sakichiand Ishibaraproceeded
to England,whileNishikawaand the Mitsui
Bussan
representative
followed
through
ontheU.S.patentapplication
process.
Sakichirecordedsix U.S. patentsduringthe years1909-1914,including
inventions
relatedto a warplet-offanda circularloom (1909),an automatic
shuttle-changing
mechanism
and a pickercheck(1910),a shuttle-changing
loom(1912),anda protecting
devicefor shuttlereplenishing
(1914)[Annual
Reportsof the Commissioner
of Patents,1909-1914].
Sakichi
reportedly
felt thathistechnical
capabilities
weresuperior
to the
U.S. loommakers
as he left New York for Englandin October1910.He
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933/ 13
investigated
spinning
andweaving
millsin Manchester
andthenvisitedmills
on the Continentfor anothermonthbeforearrivingbackin Japanin January
1911 [p. 64].
In the widelycirculated
and prescient
reportof his Britishtravels,
Saldchi
madea dkectlink betweenthe development
of the automatic
loom
and the Japanese
abilityto captureBritishexportmarkets,a possibility
requiringmuch additionalindustrialdevelopment
and twentyyearsto
accomplish
(seeMassandLazonick,1990).
On firstseeingManchester,
I realizedthatmakingour industrythe
biggest
wouldbe a fairlyeasytask.In England,the average
number
of machines
eachfemaleoperatormonitorsis only4.5. Moreover,
there are no factoriesequippedwith automaticlooms.For this
reason,
I holdgreathopeforourindustry.
Additionally,
thewagesof
Britishworkersareoverfourtimesthoseof ourworkers.In Japan,
the number of machines our workers on double width looms can
operate
is gradually
increasing.
For production
costsof onepound,
ouroutputis slightly
higherthanthatforBritain.If we manufacture
our automaticloom, and the number of machinesour workers
operaterisesto eight,it is estimated
thatourlaborcostsper pound,
will dropto 23%of Britishcosts.If we cando this,wewill gradually
overtaketheBritish,culminating
in certainvictory[p.64].
Readyandeagerto renewhismanufacturing
anddevelopment
efforts,
Saldchithis time avoidedchallenges
to his managerial
controlby securing
personal
sources
of financing.
He andhisfamilyrelocated
to a newtextilemill
in Nagoya,whichexpanded
from 100to 200 loomsbetween1911and 1914.
Saldchi's
intenseeffortsin automaticloomdevelopment
led him to focuson
minimizingthe extentof yarnbreakage.
For the first time, he decidedto
complementhis researchon improvedloom operationwith large-scale
research
into spinningtechnology.
In effortsto minimizerelianceon outsidecapital,Sakichiestablished
the Toyoda Automatic Weaving Factory,a privatelyfinancedand closely
heldclothmill thatmanufactured
clothcommercially
andwassimultaneously
dedicated
to loomexperimentation.
Althoughtherewereno dominantoutside
financialpartners,the Mitsui OsakabranchmanagerFuginoKamenosuke
servedon the executive
boardof thecompany.
Sakichi's
initialfinancing
was,
however,insufficient
to realizehisplannedgoalof equipping
200 loomswith
automatic
shuttle-changing
mechanisms.
Insteadonly 100widepowerlooms
werepuxchased,
andonlyeightof thesewereequipped
withautomatic
shuttlechanging
mechanisms
at the start.
Needingthe other 100 loomsin order to maintainthe combined
commercial
viabilityof his mill and loom experimentation,
Saldchisecured
additional
financing
in a remarkable
manner.In October1912,he renegofiated
the termsof the originalcontracttransferring
his loompatentrightsto the
ToyodaLoomWorks.According
to the originalcontract,
aftera 10percent
profitwaspaidoutasdividends
to ToyodaLoomWorks'shareholders,
one-
14 / WILLIAM MASS & ANDREW ROBERTSON
thirdof the remainingprofitswereto be awardedto Sakichi.Willingto forgo
his shareof futureearnings,
Sakichiagreedto tradethe remainder
of his
revenueclaimsfor a lump-sumsettlement
of 80,000yen.Sakichiwasableto
purchase
the additional
loomsandtherebyto sustain
the momentum
on his
automaticloom experiments
aswell. Sakichi's
commitment
to securingthe
fundsnecessary
to preventtheshort-run
diminution
of hisexperiments
proved
extraordinarily
costlyin thelongrun.Themagnitude
of thefutureearnings
he
tradedawaywason a scalehe couldnot possibly
haveforeseen.
From1914to
1919 the ToyodaLoomWorksearned3 millionyen that wouldhavebeen
turnedoverto Sakichiasroyaltypayments.
However,Sakichidid sustainthe
viabilityof hismillconcern
duringa periodwhenhedidnotwantto relinquish
solecontrolof hisenterprise
[pp.65-67].
As Table 3 shows,the ToyodaLoom Worksdeveloped
increasingly
populariron wideloomsastheWorldWar I economic
boomextended
their
market.The useof widepowerloomsat smaller-scale
weavingmillsbeganat
this time as well. "The war stoppedthe flow of Europeanand American
cottongoodsinto Asia, and Japanese
spinningand weavingmanufacturers
surgedto fill thevacuum"[Hayashi,
1983,p. 13].
Meanwhile,
theToyodaAutomatic
WeavingFactorywasmanufacturing
cloth,with a cornerof the facilitydedicated
to loom experiments.
Sakichi
foundthatthepurchased
yarnwasproneto frequentbreakage,
problematic
for
weavingwith an automaticloom. He thereforedecidedto integratehis
operations
backward
into spinning.
To confront(andsolve)the fundamental
technicalproblemsinvolved in automaticweaving, Sakichi needed to
consolidate
the complementary
technical
andorganization
linkages
between
weavingand spinningoperations.He plannedto begin an experimental
spinning
department
at Nagoyain 1914with only6,000ringspindles,
a much
smallerfacilitythanthe average
mill of 50-60,000spindles.
At thispoint he
deepened
his alliancewith IchizoKodama,the managerof Mitsui'sNagoya
branch,who providedhim assistance
in establishing
spinningoperations
[pp.67-68].
Sakichisteadilyexpandedhis integratedfacilitiesin responseto
increased
salesstimulated
by the World War I economicboom. Sakichi's
daughter
Aiko marriedKodama'syoungerbrotherRisaburoin 1915.At the
timeRisaburo
wasthebranch
general
manager
forC. Itoh& Co.,a leading
raw
cottontradingcompany.
The Toyoda-Kodama
familyalliancejoinedtextile
technological
capabilities
with marketing
expertise
in critically
essential
input
and product markets: cotton and cloth. The alliance had dramatic
consequences
withinthe Toyodafamilyaswell.FollowingJapanese
custom,
Sakichi
adoptedRisaburo,
whothereby
became
hiseldestson,supplanting
his
biological
sonKiichiroashisprimaryheir[10p.
68-9].
One autoindustryhistorian,
MichaelCusumano,
hascitedthe adoption
of Risaburoas a primaryreasonfor Sakichi'senduringcommitmentto
business
expansion
into othermajorgrowthareassuchasautomobiles.
Sakichi
wantedto providea corporate
legacylargeenoughfor both heirsandtheir
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933/ 15
families.With a sufficientlylargeinheritance,Kiichiro couldreceivehis due
and familyresentments
that mightotherwisethwarteffectivedevelopment
of
theproductive
potentialof thealliance
couldbe avoided[Cusumano,
pp. 58-59].
The periodfrom 1912to 1915provedto be a veryproductiveperiod
for automaticloom inventionand patenting.Most important,Sakichimade
notableadvances
in patentingan improvedlet-off device.But research
and
experimentation
onautomatic
loomssubsided
astheToyodatextileenterprises
provedincreasingly
successful.
After fouryearsof war-timegrowth,the ToyodaAutomatic
Weaving
Factorywasreplaced
by ToyodaCottonSpinningand WeavingCo., Ltd.,
in 1918.The new companywas established
with Sakichias presidentand
Risaburo
asmanaging
director.The company
wascapitalized
at 3 millionyen
($1.5million). The newly incorporatedentity had 34,000 ring spindles,
1,000powerlooms(onlyeightof whichwereequipped
withautomatic
shuttlechanging
mechanisms),
and 1,000employees
andprincipalshareholders
(see
Table4) [pp.V0-1].
Table4:ToyodaCottonSpinning
andWeavingOwnership,
1918
Stockholders
% shares
SakichiToyoda
FujinoKamenosuke
(Mitsui)
RisaburoToyoda
Kodama Yoneko
KiichiroToyoda
48.0
29.4
10.0
9.0
.5
Kodama Ichizou
1.0
5 OtherToyodaRelatives
1.2
15 Unrelated Individuals
1.4
Total Shares
In October
100,000
1918 Sakichi traveled with Nishikawa to the Chinese
mainlandto investigate
the prospects
for establishing
a new spinning
and
weaving
enterprise
there,a projectthatwouldtakethreemoreyearsto bringto
fruition.His expressed
reasons
for seeking
an offshoreproduction
sitewere
two-fold:First, Sakichifek that beyondbusiness
considerations,
he would
developproduction
abroadwhenotherJapanese
spinning
companies
would
not, servingthe nationalinterestby improvingrelations
with China.Second,
Japanese
livingstandards
andwageswereincreasing,
and Sakichiwasaware
thatJapanese
wageadvantages
couldnotcontinue
indefinitely,
sothismove
wasalsoa strategic
decision
to produce
in a lower-wage
economy
[p.73].
Sakichi
setup a personally
controlled
enterprise
in China.After 1920
whenChinese
tariffswereraised,
other Japanese
spinning
companies
began
settingup Chinese
subsidiaries.
Sakichi
responded
by expanding
his China
operations
and established
the Toyoda Spinning& WeavingWorks in
Shanghai.
Capitalized
at5 millionYo (approximately
5 millionyen)Sakichi
was
president
andAkijiNishikawa
wasthe general
manager.
Thismill had60,000
spindles
and400 looms.Sakichi
movedhisfamilyto Shanghai
to ensurethat
16 / WILLIAM MASS & ANDREW ROBERTSON
the venturewould be a success.
Nishikawawas askedto managethe textile
company
operations
[p.78].
Joinedby his son,Kiichiro,in 1920andwith his financialsituation
better than ever, Sakichionce again engagedin loom researchand
development
on thescalefromwhichhe hadpulledbackin 1914.Soonafter
theShanghai
company
wasestablished,
Sakichi
devoted
hisenergy
to a circular
weavingmachine(an inventiveeffortthatwasneversuccessful,
althougha
prototype
is the centerpiece
in the mainlobbyof the newlyopenedToyota
Museum)and automaticloom invention.Sakichitraveledback and forth
betweenShanghai
and Nagoyaand oversawthe expansion
of the Nagoya
experimental
facilityfromeightto 32 automatic
shuttlechanging
looms[p.81].
Kiichiro AssumesHands-on ResearchLeadership
Kh'chiro
wasa mechanical
engineer
trainedat the University
of Tokyo.
He workedfor hisfatherupongraduating
from collegein 1920.Althougtlhis
thesisdealtwith pneumatic
pumps,asa memberof the company's
technical
staff he became a specialistin castingtechnologyand machine-parts
manufacturing
for ToyodaSpinningand Weaving[Cusumano,
1985,p. 58].
Kiichiroplayedthe centralrole in the intensified
researchactivities,
which
rapidlyachievedmany improvements.
A new automaticshuttle-changing
mechanism
was developed,
differentfrom the two centralinventionsthat
Sakichi
hadpatented
in 1903and1909.
In 1903 Sakichihad designed
an automaticshuttle-change
motionin
whichthe shuttlechangeoccurred
belowthe "race"uponwhichthe shuttle
traveledfromonesideof the loomto the other.Duringthe shuttlechangethe
newshuttlewaspushedfrombelowthe race,forcingthe exhausted
shuttlefrom
theshuttle
boxat theendof therace.Thisapproach
wasnotsuccessful.
Sakichi
developed
an alternative
designin 1909in whicha pushingrod horizontally
movedthenewshuttle
intotheshuttle
boxduringtheshuttlechange.
One advantage
of thesecond
approach
wastheincreased
timeallowedto
execute
the shuttlechange.
Mostshuttle-change
mechanisms
weremorecomplex,requiring
theloomto stopoperation,
thenstartup againafterthe shuttle
exchange
occurred.
Sakichi's
simplermotionoccurred
moreslowlythanother
non-stop
shuttle
exchangers
andoperated
withprecision
evenathighspeed.
The fundamentalinventiondevelopedby Kiichiro and patentedin
1925,is described
asfollows:"[A]mechanism
linkingthefrontandrearpanels
of the shuttlebox, ensures
that asthe new shuttleis pushedinto the shuttle
box, both the front and rearpanelsmovesimultaneously;
because
of this
improvement
thismotion's
shuttle
changes
became
smoother
andrequired
less
power.In Sakichi's
1909invention,
in whichthe frontandbackpanelsof the
shuttle
boxopenedindependently
at highspeeds,
delayed
opening
of theback
panelcaused
mischanges
to occur"[pp.S14-1S].
Justasimportantfor successful
commercialization
asthe fundamental
patentedinventions,essential
modifications
were made on the other basic
loommechanisms
suchasthewarplet-offdeviceandthewarp-stopmotions.
INNOVATION IN THE TOYODA ENTERPRISES, 1885-1933/ 17
Sakichifinallydecided
to operatehisownautomatic
loomfactoryasa
pilot phnt, but the 32 experimental
loomswereinsufficient
for effective
development
of management
practices
andworkertraining.
In addition,the
warp preparationprocesses
requiredfurther modificationfor automatic
weaving,
andSakichi
recognized
thatsuccessful
development
wouldrequirea
separate
production
facility.
An automatic
loompilotplantwasbuiltin Kariya,
AichiPrefecture,
in 1923.With potentialcapacity
for 500 automatic
looms,
production
wasbegunwithtwohundred
loomspurchased
fromtheToyoda
LoomWorksandnewlyequipped
with automatic
devices.
The loomtesting
stimuhtedan increased
rateof invention,asmeasured
by an accelerating
rate
of patentapplications.
From1903through1921therehadbeenfiveToyoda
shuttle-changing
patents;
nineadditional
patentsin thiskeymechanism
were
developed
between1922and1929.Yarnwassupplied
by theToyodaSpinning
& Weavingfactory.Earlyon, testresults
madeapparent
thelimitations
of yarn
qualityat the parentcompany.
It becamecritically
necessary
to managethe
spinning
process
itself,whichrequired
the establishment
of a new,dedicated
spinning
department.
Theminimum
efficientscalefor a spinning
factorywas
20,000ring spindles
costing2.5 millionyen,a scaleof operationthat was
reachedat Kariyaby 1926[pp.82-84]:
SakichiaskedtheToyodaLoomWorksto produce1,000powerlooms,
on which he would attachhis automaticmechanisms.
However,a dispute
eruptedover the interpretationof the renegotiated
terms of the 1912
agreement
regarding
who actuallyretainedcontroloverSakichi's
1909patent
rightsandtheirapplication
to theshuttle-change
mechanisms
Sakichi
intended
to install.In effect,beforecooperating
withSakichi's
experiments,
theToyoda
LoomWorkswantedhim formallyto signoverto themthe 1909patentrights,
a stepSakichi
hadnot takenaspartof the 1912settlement.
The disagreement
andconcern
overdistribution
of potential
returnsfromfuturedevelopment
of
the 1909patentsprompted
Sakichi
to improvetheautomatic
loomandat the
sametime to strengthen
hispatentclaimsindependent
of the ToyodaLoom
Works.Meanwhile,evenas the disputeover patentrightsintensified,the
ToyodaLoomemployees
producing
theloomsto whichtheautomatic
shuttlechangemechanisms
were attachedworked directlyunder Sakichi[Suzuki,
1994,p. 170].
In October1924,Sakichidramatically
gatheredthe employees
of his
company
andaskedthemto put forthgreaterexertions
to sustain
operations
profitably,
whilehewouldensurethatinventiveeffortson theautomatic
loom
would be intensified.The resultswere immediateand just as dramatic.In
Novemberand Decembertherewere ten new patents,includingthe most
importantsinglepatent,which would governthe designfor the shuttlechangingsystemas it was developed(Kiichixo's1925 shuttlebox). The
automaticloom designwas sufficiently
perfectedto allowpreparations
to
beginformassproduction
[p.84].
In thisfirstphase,
however,
thefactory
wasnotadequate.
Sakichi
leased
an ironfactoryin Hioki fromhisclosefriend,Nozue,andaskedhislong-time
18 / WILLIAM MASS & ANDREW ROBERTSON
associate
Kubota to constructa foundryand castingfacilityin the Hioki
foundry.
During1925theautomatic
loomwasredesigned
formassproduction
and successfully
testedin a pilot plant of 350 looms.In 1926 Sakichi
established
the Toyoda Automatic Loom Works in Kariya,next to the
experimental
spinning
andweavingmill. Soonafterits establishment,
fttst
Kuboto,then manyother engineers
and skilledtechnicians
from Toyoda
LoomWorkstransferred
to the new company.
This group,longattachedto
Sakichi,
became
thenucleus
for building
upproduction
capabilities,
particularly
in casting,
asrequixed
in theproduction
of automatic
looms,thenof high-draft
tingspinrang
frames,andeventually
of automobiles
[Suzuki,
1994,p. 170].
The ToyodaAutomaticLoom Workswascapitalized
at 1 millionyen
($460,000)
andproduced
1,203automatic
loomswithinthefttstyear.Of these,
520loomswereplacedin theKariyaexperimental
factory;528wereplacedin
the mainbranchplantof ToyodaSpinning
& Weaving;124automatic
looms
wereplacedin the Kikui Spinning
& WeavingCompany(a closelyaffiliated
millestablished
in 1918);24 in theToyodaKikuiWeavingFactory;
andthelast
seven,the only earlyloom modelsoperatedoutsideof Toyoda-controlled
facilities,went to Kanebo.
The needfor andactualtestingof alterations
in the yarnpreparation
andspinning
processes
becamea matterof utmostimportance
for successful
automatic
weaving.The Toyodaapproach
entailedextensive
testingon a large
scaleto gainan understanding
of the linksbetweenmaterialsprocessing
and
machinerydesign.RisaburoToyodareviewedthishistoryin 1929in a textile
tradejournal[Toyoda,R. 1929,p. 9-10):
For example,insufficientattentionis paidto preparatory
processes.
Thisis the primaryenemyof automation.
Thisis eventhe casein
reformedfactories
in whichautomatic
loomshavebeensuccessfully
adopted.Even there,one frequentlyhearscomplaintsaboutbad
yarn.At ToyodaAutomaticLoomalso,fromtheverybeginning,
we
devotedthegreatest
careto thisproblem,spinning
yarnfromlong
fiber cotton.However,becauseof improvements
in the above
mentionedpreparation
process,
it is possible
nowto useraw cotton
hardlydifferentfrom thatusedby the standard
powerlooms...An
importantpointin researching
the problemof how to adaptthe
loom to Japanese
conditions
is that the generalapplication
of
automatic
loomsto textilemanufacture
is stillin its infancy...Itis
our company's
greatestdesireto producea loom adaptedto the
currentstateof our cottoncloth industry,and in the future to
accompany
thisdevelopment
of more and more advancedcotton
weavingtechnologywith the productionof these looms. For
example,
recently
wehavebeentesting
a loomfor extended
periods
of time and gettingresultsof 220 picksper minute.Recentlyin
England,
whetheranAmerican
bobbinchanger
or a shuttlechanger
cotfid exceed 160-70 picks per minute provokedstormsof
controversy.
However,in the operational
experimentation
carried
outat ourKariyafactory,because
a smalltestsample
isno goodfor
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933/ 19
ensuring
theobservation
of eachandeverytypeof designflaw,two
hundredto five hundredand thirtymachines
are usedin testing.
Initially,we assigned
eachoperator
sixlooms,butwe havegradually
increased
this so that now eachoperatorhandlesover fifty looms,
with theexpectation
thatthisnumberwill soonexceedsixtylooms
per operator.
The ToyodaAutomaticLoom Worksassumed
pride of placeas the
centralconcernamongthe growingnumberof firmsm the Toyodagroup.
Kiichixobecamea managingdirectorm chargeof loom production.A
founds, an ironworks,anda woodworking
shopwerebuilt,andsalesof the
ToyodaG-typeautomatic
loombeganm 1927.The newautomatic
loom cost
3.3 timesas much as the 200 yen princeof a conventional
power loom.
However,the differences
in staffnag
requirements
weredramatic.One expert
described
the typicalcomparison
as the differencebetweena weaverwho
couldoperate25 automatic
loomsandoneoperating
onlytwo to threepower
looms,yieldinga commensurate
nine- or ten-foldincreasem productivity
[Ishii, 1979]. The automatic loom was an immediate successm the
marketplace.
As Table 5 indicatessaleswereconcentrated
with the integrated
spinning
mills.
TaMe $: Salesof AutomaticLooms,ToyodaAutomaticLoom Company
(Hioki FactoE•m 1924to mid-1931)
Total Domestic
Market
Integrated
School/Inspec.
E•ott
Korea
Platt
13,143
.....
8,621
24
3,825
444
1
Sakichi's
optionsfor raisingthe capitalfor the newcompany
included
participation
by oneor a combmarion
of the followingorganizations:
Mitsui
Bussan,
ToyodaLoomWorks,andtheToyodaspinrang
& WeavingCompany.
The issuesincludedsharingfinancialrisk, securingfamilyand managerial
autonomy,
andavoiding
potentialpatentconflicts
betweentheToyodaLoom
Worksandthe ToyodaSpinrang
& WeavingCompany.
In August1926the
ToyodaLoomWorkssuedto forcea changein the nameof recordon the
disputed
1909patent.Thisactionendedthepossibility
of cooperation
between
Sakichiand the companyhe originally
had established.
The patentsuitwas
resolved after 18 months with the direct mtervenrion of Aichi Prefecture's
governor,but the termsof thisresolution
are not known.The shareholding
interests
in theToyodaAutomatic
LoomWorksareshownin Table6 andthe
composition
of thefirstcustomers
is shownm Table5 [84].
20 / WILLIAM MASS & ANDREW ROBERTSON
Table6.'ToyodaAutomatic
LoomWorks,Ltd. Ownership,
1927
Stockholder
(at timeof establishment)
% of shares
ToyodaSpinning-Weaving
Inc.
61.5
SaldchiToyoda
5
KiichiroToyoda
5
RisaburoToyoda
5
2 OtherToyodaRelatives
5
Ichizou Kodama
9 Others
Total Shares
5
13.5
20,000
The companypresident
wasRisaburo,
and Kiichirowasthe general
manager.Saldchiwas a counselor,
as he returnedto assuming
primary
responsibility
in overseeing
invention.He alsorenewedhis effort to inventa
circular
loom.In addition
to producing
cottonspinning
andweaving
machines
profitably,
theexpressly
statedandprimarypurpose
of theToyodaAutomatic
LoomWorks,Ltd.,wasto research
anddevelop
textilemachinery.
Sakichisuffereda mild cerebralhemorrhage
in 1927.For a time he
appearedto be recovering,
but acutepneumonia
set in and he died on
October30,1930.The Toyodaenterprises
continuedto expand,with the
establishment
of the Shonaigawa
Dye Worksin 1928andToyodaOshikiri
Spinning
andWeaving
Company
andChuoSpinning
& Weaving
in 1929.
Indigenous Development of JapanesePower Loom Manufacturing
Capability:A "SocialPhenomenon"and Competition
Although
theToyodaLoomWorkswasanearlyindustry
leader
- it had
manyrivals- so many,in fact, that TetsuroNakaokahasreferredto the
activities
of loominventorsandentrepreneurs
duringthe latenineteenth
to
earlytwentiethcenturyas a "sort of socialphenomenon"
widespread
throughout
theweaving
regions
[Nakaoka,
1982,p. 55].In 1733,JohnKay,a
Lancashire
weaver,inventedthe flyingshuttle,calleda batten,and doubled
weaverproductivity.
Kay hadmodifiedthepickerstickmotionthatthrewthe
shuttle
fromoneloomsideto theotherbyattaching
it to a handleat thetop
of theloom.Theweaversimplypulledthehandlewithonehandto movethe
shuttle
fromsideto side.Twoweavers
anda loommaker,sentbytheKyoto
prefectural
government
to Lyon,France
in 1873,spentayearstudying
Western
weaving
technology,
andthemostimportant
expertise
theybrought
backto
Japanwastheirknowledge
of thebatten.
The battenspreadgradually
throughout
the weavingdistrictsand
markeda turningpointin thepaceandextentof continued
improvements
to
the traditionalhandlooms.The battenis significant
for the evolutionof
weaving
technology
wasks functionasthe pivotallinkin the transition
from
handto powerlooms.
At various
pointsin thedecades
surrounding
theturnof
thecentury,
eachweaving
regionhaditsownleading
loominventors.
Skigejiro
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933/ 21
Matsudain Mie inventeda pedal-operated
handloomin 1885,the f•rststep
towardthedevelopment
of a practical
powerloom.Soonthereafter
in Tochigi,
KozaburoTerasawaredesigned
the pedaloperatedloom in a mannerthat
closelyprefiguredthe earliestpowerlooms.Theseimprovedhand looms
diffusedwidelyin the 1890s.The transformation
frompedalloomsto power
loomsprincipally
required
newmechanical
devices
for thewarplet-offmotion
thatwouldcontrolandmaintainconstanttensionon the warpyarns,a cloth
rolltake-upmotion,a powerdrivemechanism,
andseveral
partsmodifications
of lesser
significance.
Thesetwoinventors,
alongwithothersincluding
Sakichi
Toyoda,developed
locallysuitedpowerloomsthatvariedin theincorporation
of the devicesneededto transformincreasingly
complexhandloomsinto
powerlooms.
Forminga de factotechnological
community,
theseinventors
learned
from eachotherandat the sametimedeveloped
differentiated
loom designs.
SakichiToyoda'searlyeffortsat IgetaTradingCompany
in Aichihavealready
beendescribed.
All of the earliestmodelsandvarietiesof powerloomswere
narrowloomsconstructed
fromwoodexceptfor thegears,pulleys,anda few
othermetalparts.Ishimatsu
Kubotaof Osakaproduced
thef•rstJapanese
iron
loom in 1903.MasajiroSuzukiestablished
a loommanufacturing
business
in
Enshuandconstructed
an iron narrowpowerloomin 1908.SakichiToyoda
made the transition first to mixed wood-iron
and then to all-iron looms in the
1907-9 period.MichioSuzukifoundedSuzukiLoomWorks(thepredecessor
of SuzukiAutomobile
Industry)anddeveloped
a powerloomin 1913.
The indigenous
development
of powerloom manufacturing
capability
in itsinitialstages
advanced
productivity
in thetraditional
sectorof specialized
weavingmills.Spunfrom domestically
grown,shortfiber cotton,Japanese
yarnwas coarse(definedas a yarn"count"below20). Domesticconsumers
preferrednarrowcloth,whichwasusedfor kimonosand appredatedfor its
suitability
for dye absorption
(especially
indigo).In effect,domesticmarket
standards
createda barrierto œmer,
importedyarnand cloth.(Direct tariff
protectionwas also in place.)As higherincome consumers
purchased
importedcottontextiles,in part as a substitute
for nativesilkproducts,the
tastes
of thebroaderconsuming
publicchanged.
(Fora historyof thechanging
productqualitychoices
in theJapanese
textilemarket,seeNakaoka,1982].
Changes
in thequalityof yarnsupplied
by the spedalized
spinners
and
woven by the specialized,
traditionalweaversnecessarily
changedin a
complementary
manner.Over timethe specialized
weaverslearnedto useyarn
madeby mixingsilkandcottonfibers,or by mixinglonger,importedcotton
fiberwith domestic
cottonstock.Eventually
the weaversbecamecapableof
fullyincorporating
thedomestically
spunyammadefromwhollyimportedraw
cotton into their cloth. The specialized
weaversmaintaineda competitive
advantage
in providingnarrowclothmadefrom coatsetyarn for domestic
customers
untilthewidespread
adoptionof WesterndressafterWorldWar II.
During this transition,the traditionalProducingCenter (Sanchi)weaving
22 / WILLIAM MASS & ANDREW ROBERTSON
sectorsadaptedto the changingfashionby increasingly
adoptingbroader
powerlooms(seeTable7 below).
The integrated
spinningmillscontinuedto buy the majorityof their
loomsfrom foreignmanufacturers
until the successful
domesticdevelopment
of ironbroadpowerloomsduringWorldWar I. Duringthe 1920s,the large
integrated,export-oriented
mills increasingly
purchaseddomestically
manufacturedlooms.By 1929theToyodaLoomWork's14 bestcustomers
(those
buyingmore than 1,000Toyodapowerlooms)were integratedmills,12 of
whichwereJapanese
andtwo of whichwerebasedin China.They purchased
24,781 non-automaticToyoda power looms between 1923 and 1929,
equivalent
to 52 percentof their1929stockof looms.
Table Z' Chssification
of PowerLoomsusedby the Membersof the Enshu
ExportCottonTextileIndustryTrade(March,1937)
Less
Company/Inventor Than
More
More
More
More
More
Than
Than
Than
Than
Than
Model(Location)
36"
39"
40"
50"
60"
70"
Total
ToyodaModel
667
730
5,961
1,014
56
14
8,442
SuzukiModel
(Hamamatsu)
202
188
522
952
290
55
2,209
Iida Model
674
104
765
90
54
-
1,687
NisshinModel
364
368
330
4
16
-
1,082
NogamiModel
256
220
248
12
-
-
736
4,073
3,924
10,988
631
159
22,993
(Hamamatsu)
Total
3,218
The Toyoda Loom Works continuedto confront significant
competition
fromrivaldomestic
powerloommanufacturers
in sellingto the
independent
weavers,
whowereincreasingly
oriented
to makingbroadcloth
for
domestic
and(expanding)
foreignsales.
Withtheimmediate
marketsuccess
of
automatic
loomsin theintegrated
millmarketby theirfounderSakichi's
new
firm, the ToyodaLoom Works futuresaleswould becomeincreasingly
dependent
on capturing
a largershareof thegrowing
marketfor broadpower
loomsin the specialized
weavingproductioncenters,the Sanchi.Table 7
showsthe extentof competitionamongdomesticloom producers
in the
INNOVATION IN THE TOYODA ENTERPRISES, 1885-1933/ 23
export-oriented
Enshu districtin 1937, with the largestsingleshare
0 7 percent)
beingheldby theToyodaLoomWorksin the growing
broad
loomsegment[Izumi,1980,p. 15].
The Toyoda Automatic Shuttle-ChangingLoom: CorporateIndustrial
Research, Indigenous Development, Technology Transfer and
International Competitiveness
Sustained
Japanese
research
intoautomatic
loomsbeganin 1898whena
technologist
fromOsakaSpinning
Company,
TakeoYamanobe,
returned
from
Americain 1898with an automatic
loomfrom theDraperCompany.In 1900,
the majorspinningcompanies
senta groupof technicalspecialists
to the
United Statesto studythe automaticloom that had been inventedby
J.H. Northrop and commercially
introducedby his employer,the Draper
Company,
in 1895.InventingtheDraperautomatic
loominvolvednumerous
complementaqr
inventions
anda scaleof industrial
research
thatresulted
in a
rateof patentingat Drapersurpassed
onlyby the mostinventiveAmerican
companies
at the turn of the centurysuchasGeneralElectricandWestinghouse.The twomostfundamental
inventions
weretheDraperautomatic
loom
weft-replenishing
mechanism
andthewarp-stop
motion.The formerpusheda
yam-filledbobbinintoplacewithina shuttleandpushedouttheemptybobbin
whenits supplyof yarnwasexhausted
withoutstopping
theoperation
of the
loom.Becausethe bobbinwasinsertedwithoutstoppingor evenslowingthe
operationof the shuttleand the loom, the Draperloomwascalleda bobbinchanging
automaticloom.To enablethe weaverto operatea largernumberof
loomsnow that the time-consuming
taskof changingthe weft supplywas
mechanized,
a key complementaqr
inventionwas the warp-stopmotion,
inventedto easetheweavers'"mentalanxiety"frommonitoring
the actionand
preventing
faultyclothresulting
frombreakage
in thewarpyarn[Mass,1989].
The OsakaSpinning
Company,
CalicoFimshing
andWeaving,andthe
Mie Spinning
Companyinstalled
Draperloomsin theirmillsasearlyas 1900.
(Outsideof the UnitedStates,the DraperCompanyinventions
were more
frequentlyknown as Northrop looms, primarily becausethe Drapers
participated
in establishing
the moreexport-oriented
BritishNorthropLoom
Companyto markettheirinventions
in Europeandelsewhere.)
Japanese
mills
had experimented
with both Draper(U.S.)andNorthrop(British)automatic
looms. Becausethey had difficultymaintainingthe looms in operating
condition,
theyusuallyusedthe loomsassimplepowerloomsafterremoving
theautomatic
attachments
[Hayashi,
1983,p. 12.Thesethreecompanies
failed
in theirearlyeffortsto operateautomatic
looms,but theyamalgamated
over
timeto formoneof the sixmajorspinners,
ToyoSpinning.
Sakichi's
attemptsto developa loomthat couldautomatically
replace
theweft whenexhausted
beganin 1902soonafterthesefirstautomaticlooms
arrivedin Japan.But Sakichipursued
thedevelopment
of an automatic
shuttlechanging
loom ratherthan strivingto imitateor furtherdevelopNorthrop's
24 / WILLIAM MASS & ANDREW ROBERTSON
design.Interestingly,
automatic
shuttle-changing
loomsweredeveloped
and
introduced
in Britain,buttheywereevenlesscommercially
successful
thanthe
meagerpenetrationof the loom marketby the BritishNorthropLoom
Company's
bobbinchanger.(Lessthan 5 percentof Britishloomswere
automatic
on theeveof WorldWar II.) [MassandLazonick,1990].
In addition
to theDraperandNorthropautomatic
looms,otherforeign
modelsof automatic
loomsimportedintoJapanincludedthe Stafford,Henry
Bayer,Ruchi,Hartmann,
andKip-Baker
looms.Domestic
rivalsincluded
the
Ariuma, Sakamoto,Suzuki, Noue, Kimoto Steel, and Osaka Machinery
automated
looms.Contrasting
the differences
in technology
strategies
across
all thesecountries
and enterprises
is beyondthe scopeof thispaper.The
principalconcernsaddressed
hereare relatedto the technology
strategyat
Toyoda.
In a 1929articlepublished
in the Japanese
tradejournal,TheTextile
Review,
I•'chiro Toyodaexplained
thehistoryof research
anddevelopment
for
an automaticshuttle-changing
loomat ToyotaAutomaticLoomWorks.The
centraldeterminingfactor aroundwhich other importantconsiderations
revolvedwasthe significantly
greatermachineprecision
requiredto integrate
the bobbin-changing
mechanism
with the restof loomoperations
compared
with the shuttle-changing
mechanisms.
Because
the bobbinwasinsertedinto
the operatingshuttlein the formercase,whereasthe muchlargershuttlewas
replacedin the latter, the bobbin-changer
requiredmachinetolerancesno
greaterthan 1/16 inch comparedto 1/8-inch tolerancesfor the shuttlechanger.
The implications
of thedifferences
in precision
standards
weredramatic
in a numberof areas:the extent of complementary
inventionrequiredfor
integratedoperationwith the restof theloom'scomponentparts;the extentof
machinevibration,increasing
yarnbreakage
andmachinewear;the costsof
loom manufacturing;
the extentof mechanical
expertiserequiredfor both
installation
andmachinemaintenance
asmachineintegritydegraded
with use;
andtheextentof retraining
required
for weavers.
For eachof theseissues,
the
differences
favoredthe automatic
shuttle-changer.
Notingthe differences
in
cotton and yarn qualityin Japancomparedto the United States,Kiichiro
explained,
"Because
loomsin Japanmustbe ableto weaveusingthissortof
yarn,thisissuestructured
research
on automatic
machinery,
especially
in the
designof thewarpstopandlet-offmotions"[K. Toyoda,1929,p. 20].
The mainadvantages
of the bobbinchanger
werethat:1) lessenergy
wasrequiredto changethe muchlighterbobbinthanthe heaviershuttle,a
difference
of slighteconomic
consequence;
and2) thesmaller
bobbincouldbe
storedin largerquantities
in the bobbin-magazine
comparedwith a smaller
numberof shuttlesrequLdng
morefrequentrefRlingandmorelabortimein
preparation
beforeinstalling
in theshuttlemagazine.
A mill with a 1,000 normal power looms requiredmore than
300 weavers out of a total mill work force of four to five hundred workers. A
mill with 1,000automaticshuttle-changing
loomsrequiredonly 30 weavers
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933 / 25
(only20undertheidealconditions
attheToyoda
pilotmill)anda totalof only
$0 mill workers.The additional
savings
on mill laborin a mill with 1,000
bobbin-changing
loomswas possiblyas much as 12 workers.However,
Toyodadeveloped
a largershuttlethatcouldcarrya largerbobbin,requiring
lessfrequent
refillingof the shuttlemagazine.
With the largershuttles,
the
difference in the number of mill workers was reduced to seven fewer workers
on bobbin-changers.
In eithercasethelaborsavings
weresmallrelativeto the
otherfactorsinfluencing
relativecosts,and the laborcostsavings
was of
course
of lessconsequence
in lower-wage
Japanthanin theUnitedStates.
Even thoughthe shuttle-changer
requiredlessredesign
and material
change
on therestof a non-automatic
loomthanwouldabobbinchanger,
the
required
complementary
inventionandimprovements
in manufacturing
were
considerable.
In theirfirsteffortsat the Kariyaexperimental
plant,Kiichiro
attachedshuttle-changing
mechanisms
to two hundred normal looms
producedat the ToyodaLoomWorks.His summary
of the experience
was
that, "It was a monumentalfailure...Withhindsight,this projectappears
stupid,but at the timewe wereworkinghardto understand
the calibration
of
automaticlooms.As one mightexpect,the loomsran as if possessed
by
demons.They repeatedlybroke down and refused to run smoothly"
[K. Toyoda,1929,p. 23].
Over the years,the effortsat redesigning
weft exchange
mechanisms
providedan importantstimulus
to moreextensive
inventiveactivity.Sakichi's
inventions
were not a soloeffort,but increasingly
reliedon an a groupof
contributors
whomhe andKh'chiro
assembled.
Althoughthe company
listsa
totalof 85 patentsand28 utilitymodelsregistered
for SakichiToyoda,the
listingexplainedthat, especially
in Sakichi'slater years,Kh'chiroand two
employees
werealsoinvolvedin inventiveactivities.
Research
by IshiiTadashi
of theJapanese
Patentoffice andShojiOkumura,anindependent
historian
of
technology,
hasestablished
thatSakichi's
actualrolewassignificantly
lessthan
hewascredited
within thecelebratory
biography
issued
shortlyafterhisdeath,
which was editedby Kiichiro and Risaburo.This biographyis the source
drawnon, directlyor indirectly,
by all English-language
accounts.
The Patent
Officelists29 patentsawarded
to Sakichi,
with manyof the othersactually
obtainedby Kiichiro[Okumura,1985,p. 108-9;Ishii, 1979].It is clearthat
Kiichirowasprincipally
responsible
forthecompany's
inventions
after1921.
The increasedtendencytoward corporateas opposedto individual
inventionwas a more generalphenomenon,
evenin the area of weaving
technology.
Ishii hasgraphedthe trendsin loom-related
patentsfor all of
Japanfrom 1907to 1921 for patentsregistered
to individuals
and patents
registered
to companies.
Thosegraphsindicatethatannualcompany
patents
variedbetween
oneto tenwithnotrend(butwithanaverage
estimated
by the
authorsof aroundfive),whileindividually
heldpatentsdearlytrenddown
fromthe60-70peryearrangeto between
20 and30 peryearby theendof the
period.On the otherhand,corporations
held65 percentof the 131 weft-
26 / WILLIAM
MASS & ANDREW ROBERTSON
replacement
motionpatentstakenout from 1926to 1932[Ishii,1979,no. 4,
p. 27;andno. 5.,p. 17].
Despitetheseindications
of significant
corporate
effortsat derdoping
loomscapable
of automatic
weftreplacement,
ToyodaAutomaticLoom'ssole
significantsurvivingcompetitorduringthe prewarera was the automatic
bobbin-changing
loom suppliedby the EnshuLoom Company.The developmentof the Enshuloomwasprimarilytheresultof President
Sakamoto's
effort. He was an exceptional
inventorwho did not developan internal
research
staffandorganization
remotelycloseto the scaleattainedby thetwo
Toyodafirms.However,Sakamoto
had developed
an enduringif periodic
workingalliance
with Toyo Spinning,
a clothmanufacturer
with the longest
sustained
interestin devdopingthe automaticbobbin-changing
loom.Toyo
Spinningalsomadean exceptional
commitment
of resources
towardthe
loom'ssuccessful
development.
EnshuLoomoriginated
asa single-product,
narrowloommanufacturer
in 1920.Havingworkedaschiefengineer
at theKimotoIronworks,Sakamoto
wasaskedto takechargeof renewedexperiments
with Northropautomatic
loomsat Toyo Spinningin 1920 at the requestof Toyo'smanufacturing
supervisor,
AizaburoMario. Sakamotowas hired as an engineerat Enshu
Loomin 1921.He spentfive yearsand20,000yen developing
an automatic
bobbin-changing
loom prototype,adaptingthe Draper design.During this
time,Dr. Manoreattached
the automaticmechanisms
to theoriginalimported
automatic
loomsin 1923,andimtiateda four-year
intensive
study(1925-1929)
in two Toyo factoriesof ten or more types of automaticlooms and
attachments.
The Enshuautomatic
loomreceivedwidespread
publicattention
when529 loomswereinstalledat the Nakabayashi
IntegratedClothCompany
in October1929with "120 of the leadinglightsof the textilemachinery
industryin attendance"
[Yanagihara,
1979,p. 41-42,46;Suzuki,1949p. 192-96;
Uno, p. 519-20].
In termsof marketshareandoverallprewarcompetitive
performance,
salesof the Toyodaautomatic
loomincreased
from 44 in 1925to a prewar
peakof 12,104by 1937,while EnshuLoom had first year salesin 1926 of
1,126 automaticlooms and rose to a pre-warpeak of 10,717 in 1935
[Taniguchi,1985,pp. 63-64].
As wasthe casein thedevelopment
of the Draperautomaticloom,the
increasingmechanicalcomplexityof inventingcommerciallyacceptable
automated
machinery
required
organizing
industrial
research
on a significantly
largerscale,a process
reflectedin the increasing
numberof technical
high
schoolgraduates
entering
engineering
positions
in thetextilemachinery
firms.
In 19001.7malegraduates
peryearweresoemployed,
whereas
therateof hire
wasat 3.4 peryearby the 1930s.Over the entireperiodovera thirdof these
hireswentinto theToyodaLoomWorksalone.For the period1926-1931the
ToyodaLoom Worksmade18 suchhires,and the muchsmaller,but rapidly
growing,ToyodaAutomaticLoom Companyhired 14 [Taniguchi,1985,
pp.55-56].As notedearlier,Toyoda'smainautomatic
loomrivalEnshuLoom
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933 / 27
had key individualengineers
and acquiredtechnicalknowledge
by drawing
from its allianceswith leadingmanufacturers,
but Enshu Loom had no
comparable internal staff for industrial research. Furthermore, the
organizational
development
of manufacturing
and marketingat Toyoda
AutomaticLoom Workswas essential
not only to makeand sell the new
invention,but alsoasa sourceof experience
essential
to furtherrefinement
of
the imtial innovation.
A Merger Attempt and Failed TechnologyTransfer
HavingprovidedtheJapanese
textileindustry
with textilemachinery
sinceits founding,Platt Bros.wasvery interested
in the openingof the
KaritaniFactoryandthe operation
of 520Toyodaautomated
looms.Mitsui
Bussan,
Platt'srepresentatives
in Japan,provideda full report.Plattordered
205 automated
loomsshippedto theirplantin Bombay,India for close
examination.
On the basisof this experience,
theydecidedto pursuethe
purchase
of theToyodapatentrights.Thenegotiation
beganin April1929and
lasted for several months.
Theresults
werebetterthanToyodaexpected.
Plattwantedto purchase
thepatentrightsin various
countries
outside
Japanon thebasisof a royalty
contract.
Toyodapreferred
a lump-sum
payment.
Plattwantedexclusive
access
to allloommarkets
westof Singapore,
including
India.Because
of theextreme
complexity
of thenegotiations,
PlattBros.invitedToyodaKiichiroto Britain.
At thetime,however,
Kiichirowasin theUnitedStates,
showing
two
loomsto thedominant
American
loomproducers,
DraperandCrompton
&
Knowles.In response
to thePlattnegotiations,
he hurriedbackto Japanand
thensetoff immediately
forBritain.
Kiichiro
metwithhisemployee
Chosaku
Suzuki and Aoki of Mitsui Bussan. He closed the deal after two months on
December
24, 1929.According
to thetermsof thecontract,
PlattBros.gained
theproduction
andmarketing
rightsfor everymarketexceptthoseof Japan,
China,andtheUnitedStatesfor •100,000.
A keyToyodaengineer,
Suzukiaccompanied
oneautomatic
loomto
BritaininJanuary
1930in orderto assist
PlattBros.in starting
upproduction.
Suzukispentoneanda halfyearsin Britain.Aftersomesevenmonths,Suzuki
wasableto undertake
testing
a prototype
loom.Hisreportwasasfollows:
The so-calledfirst stepof prototyping
two machines
has been
completed,
andthesemachines
arenowin actualoperation
at the
Prestonfactory.This is most heartening.
Lookingat the
manufacturing
fromitsinitiation
to thepresent,
it is altogether
like
the HiokiFactoryperiodof our owncompany's
development.
I
mostlyleavethesedifficu16es
to yourimagination.
Moreover,because
of the increasing
severityof the recession,
andvarious
manufacturing
practices,
westillcannotproduce
looms
of thesame
quality
asthetwosample
looms
sentfromourcompany
in Japan.The exhaustive
and precisenatureof loom manufacture
surprises
the foreigners
at everyturn.This pleases
me that these
28 / WILLIAM MASS & ANDREW ROBERTSON
Englishmen
who refusedto recognize
the merit of automathag
[to
producethe]automatic
loomarebeginning
to perceive
thenecessity
for them.In thisway,we gradually
worktowardsoperation
of the
loomsat 244rpm [p.142].
One response
to the severedeclineof the Britishcottontradewasthe
concentrationof textile firms throughan amalgamated
organization,the
LancashkeCotton'Corporation(LCC), createdin January1929. One of the
tasksof thisorganization
wastherationalization
of machinery
andequipment.
In order to assistmembersin their choicesof equipment,
the Lancashire
CottonCorporation
solicitedfrom eachautomaticloom manufacturer
forty
machines to be tested between the end of 1931 and 1932. In order to enter this
competition,
PlattBros.rushedthe start-upof production
in orderto have
fortymachines
on handfor thetest.Suzukiwascrucialto thisprocess.
At the
endof March1932,fortymachines
wereshippedto the LCC. The resultsof
this test demonstrated
that the Northrop,Vickers-Stafford,
Whitt,aker,
and
Platt-Toyoda
loomswereallcompetitive.
Althoughtherewasgreaterbreakage
and wasteon the Platt-Toyodalooms,significant
improvementin these
aspects
occurred
overthefour-month
test.
Qualifiedastheseresults
mightbe for Platt-Toyoda,
thiswasa notable
achievement,
giventhatsomeof theloomsweretun for the [ttsttimeduring
the testingpefiodandthiswas,in effect,the fttstorderof the Toyodaloom
designproduced
in Bfitain.In addition,the otherthreeloommanufacturers
andin particular
the Lancashke
loomsincluded
in the testwereusingfully
trained workers,which was not the case for the Platt-Toyodalooms
[Lancashire
CottonCorporation,
1931].The factthatthislevelof testing- in
termsof machines,
duration,conditions,
andindependence
from company
access
to experimentation
for purposes
of learning
- couldbecomea basisfor
assessing
technological
andbusiness
potential,
isin starkcontrast
to thehistory
of testingandexperimentation
atToyodaenterprises
described
above.
In May 1931,with his missioncomingto an end,Suzukipreparedto
return to Japan. Based on his experiences
in guidingthe prototype
development
of the Platt-Toyodaautomaticloom, he wrote up detailed
instructions,
whichweresubmitted
to MitsuiBussanand thenpassedon to
Platt Bros.
SoonafterSuzukireturnedto Japan,in November1931,Platt Bros.
contacted
ToyodaAutomaticLoom,claimingthat because
of the errorsand
deficiencies
in theblueprints,
explanations,
andmodelssubmitted
underarticle
7 of thecontract,
requiring
that"precise
information
anddetailed
warnings
be
outlined,"
theywouldbe unableto markettheautomated
loom.Estimating
a
lossof •50,000,PlattBros.demanded
a reduction
in thepatentfightstransfer
fee.In December1931,•61,500wasto havebeenpaid.PlattBros.proposed
postponing
thispayment.
Toyodaquickly
conducted
a studyevaluating
thePlattBros.claims.
The
resultssuggested
the following:
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933/ 29
The errorsin the blueprints
areregrettable.
However,for the most
parttheyaretrivial,beinglargelyrevisions
madeduringprototyping.
We do not believethat these errors supportthe extent of the
damages.
Our company
provided
PlattBros.two sample
looms,and
in addition sent Suzuki to guide the prototyping.Had these
opportunities
been sufficienfiyused,thesedamagesshouldhave
beenavoided.Thuswe cannotagreeto a reductionin the patent
transferfee. However, becauseof the variousseriousproblems
afflicfngBritainbecause
of the Depression,
we shoulddo whatwe
can to in somesmallway alleviatethe Platt Brother'spatent fee
burden.Let usbeginthesediscussions
[pp.146-7].
After extensive
negotiations,
thetwocompanies
reached
a compromise.
Platt had alreadypaid ToyodaAutomaticLoom Companyœ38,500.They
negotiated
a setdement
substituting
a singlepaymentof œ45,000for fifteen
paymentsscheduledover sevenyears, totalingœ61,500pounds.The
renegotiated
contractwas signedby Platt Bros.in Englandin July and by
Kiichiroin Japanin September
1934.
The productionand marketingof the Toyoda-Plattautomaticloom
wereneverestablished
on a sustainable
basis.Only 200 loomsweresoldover
the next two yearsof production.
The reasonsfor the failureof the PlattToyodaloomaredisputed
by thetwosides.
From the beginning
of negotiations,
Kiichiroconsidered
it highlylikely
that Plattwaspursuing
a preemptirestrategy
of purchasing
Toyoda'spatent
rightsin order to forestallcompetition.
As a defensivetechnologystrategy,
buyingthe Toyodapatentrightswasat leastpartiallysuccessful.
By meansof
this agreement,
Platt Bros.delayedthe competitionand diffusionof Toyoda
automaticloomsinto their marketsin Asia,particularly
their largeIndian
market,andinto Europeaswell.By 1936,theToyodacompany
begannegotiations throughthe Mitsui BussanLondon office to allow it to sell its own
automatic
loomsdirectly
in whatuntilthenhadbeenPlatt'sexclusive
territory.
A new agreement
wasnegotiated
in 1937wherebyToyodawouldpay
Platt3 pounds,10 shillings
for everyautomatic
loomsoldin India;outsideof
India, but within the registered
area for patentrights,the paymentwas
1 pound,15 shillings;
andelsewhere
the paymentwasonepound.Toyodawas
onceagainable to exportits automaticloom directlyto the wholeworld.
Shortlythereafter
theJapanese
economy
wasmilitarized,
andby thewar'send
automatic
loompatents
takenoutin various
foreign
countries
hadexpired.
For a timePlattBros.aggressively
continued
to pursueformalizing
its
relationship
with the ToyodaAutomaticLoomWorksthroughits Mitsui
agents.
MitsuihadbeenPlattBros.'exclusive
agentfor bothweavingand
spinning
machinery
imported
intoJapan.
At thesametime,it represented
both
Toyodas(theLoomWorksandtheAutomaticLoomWorks)in domestic
and
foreignsales.PlattBros.,anticipating
its impending
competitive
decline,was
eagerto explorethepossibilities
for furthercollaboration
andpossible
merger
withtheJapanese
companies.
MitsuiandtheolderToyodaLoomWorkswere
30 / WILLIAM MASS & ANDREW ROBERTSON
ambivalent
aboutPlatt'sproposals,
andtheToyodaAutomatic
LoomWorks
wasclearlyreticentfromthestart.TheToyodaAutomatic
LoomWorkswas
the technology
driverand the fastergrowingcompany,
lessinterested
in
joiningwithcompanies
thatmightslowit down.
The development,
production,
andsalesof automatic
loomsspurred
the development
of spinningmachinery
at the ToyodaAutomaticLoom
Works.For the period1927-1929,
the ToyodaAutomaticLoom salesof
weavingmachinery
exceeded
7 millionyen,whereasthe valueof spinning
machinery
soldwasonly265,000yen.DuringthenextthreeDepression
years,
thevalueof weaving
machinery
saleswasalmost4 millionyen,andspinning
machinery
salesroseto 2.7millionyen.Beginning
in 1933,spinning
exceeded
weavingmachinery
salesandcontinued
to do so through1938.Duringthis
period,annualspinning
machinery
salesaveraged
over 5 millionyen,nearly
75 percentgreater
thanthenot quite3 millionyenaverage
for annualweaving
machinery
sales[Toyoda,
1967].Mitsuiwasconfronting
a problemincreasingly
commonamongtradingcompaniesinvolvedboth in importingand in
representing
domestic
companies
that hadbecomeincreasingly
successful
in
production
orientedtowardimportsubstitution.
By the early1930sMitsui
suffered
a stagnation
andlossof thespinning
frameimportbusiness
similarto
whatit hadearlierexperienced
with BritishimportsintoJapan.The problem
wasmanaging
relations
withtheforeignclientanddeciding
whenandhowthe
exclusive contract could be broken or amended. In this case Mitsui's exclusive
tradingfor Platt Bros.wascontractually
limitedto spinningequipment,
but
practically
the limitations
on representation
weregenerally
appliedto alltextile
machinery.
MitsuibroughtbothToyodasto the tablewith PlattBros.,where
Mitsui was lookingto resolveits own internalconflicts[Taniguchi,1992,
p. 99].
Policytransitions
wereto be expected
ascircumstances
changed.
The
contrast
in methodsof managing
thosetransitions
provides
a windowinto the
extent of changesin the relativecompetitivestrengthsof the firms, the
perceptionof thesechanges,
and theirimpacton business
strategies.
Thus,
withinMitsuithereweredifferingperspectives
on the valueof mergingPlatt
Bros.,a maturecompany,
with the two rapidlyemerging
Toyodafirms.The
manager
of Mitsui'stextilemachinery
department,
Furttichi,
openlystatedthat
"...the two (Toyoda)fLrmshavelittle or nothingto gain from Platt Bros.
cooperation,
that theyhavealreadycopiedall the bestof Platt Bros.designs
andcancontinue
to do so,thatPlattBros.havenothingof realvalueto addto
the proposed
mergerandthat both fro'nswouldbe betteroff withoutour
participation"
[PlattBros.Archives
DDPSL 1/106/37 March30, 1931].
The seniorMitsuimanagers
fromOsakaandTokyo,SekoandNanjo,
respectively,
stillsawvaluein PlattBros.'participation,
although
themagnitude
of that valuewas opento question.ToyodaLoom'spresidentKanematsu
arguedthatPlattBros.mustpurchase
stocksharesat facevalue.JohnBissett,
the Platt Bros.directorresponsible
for technology,
wasin Japanat the time
negotiatingfor Platt. Bissettmaintainedthat "Platt's name, experience,
INNOVATION IN THE TOYODA ENTERPRISES, 1885-1933/ 31
manufacturing
knowledge,
research,
andcontactwith the textiletradesin all
thecountries
of theworldhada definitevalueandwouldhaveto be paidfor
by sometangiblesharerecognition
of that value."In response,
the Mitsui
Bussan
Tokyoseniormanager
reportedto Bissetof Kanematsu's
"certain"
beliefthat his companycoulddo anythingPlatt Bros.coulddo, and do it
better and cheaper.With this in mind Kanematsu"would not seriously
considerPlatt'sexpectedpricefor participation
in the merger"[PlattBros.
Archives
DDPSL 1/106/37April8, 1931].
Bissettwas surprised
to discoverthat one enduringresultof Platt's
licensing
theToyodaautomatic
loompatentwasa diminution
of hisJapanese
counterparts'
respect
for hiscompany's
capabilities.
According
to Bisset,
ToyodaAutomaticLoomis stillwillingto negotiate
but the priceis
goingup...(O)ur dealwith Toyodafor the manufacturing
rightsof
the automatic
loomis actingasa handicap.
Firstof all it hasfilled
Automaticloom'smindwith exaggerated
ideasof the valueof their
loom.Next theyare furrelyconvincedthatastextilemachinists
they
arenowreallysuperior
to PlattsandotherEnglishfirms,whichthey
sayare withoutnew ideas...Finally,
theyhavenot said,but have
doneeverything
to indicatewithoutactuallysaying
it, thattheylook
down on us for havingpaid so muchand havingpaid so litfie
discussion,
verypoorbusiness
people!All thisis no doubtpart of
thescheme
of bargaining
butit is disquieting
to thinkthereis justa
litfierealsubstance
in it. However,I'll treatit asbargaining
[platt
Bros.ArchivesDDPSL 1/106/37 April23, 1931].
Anotherfactorreflectingand conditioning
the relativechangein
competitiveness
of the Britishand the Japanese
franswas the continuing
depression
in sales
of Plattmachinery,
whereas
1931sawa recovery
in sales
for
bothToyodas.In March1931Bissettreportedthat both companies
were
occasionally
engaging
in pricewars.Duringthe nextmonthtradeconditions
hadchanged
sufficienfiy
so thatby lateApril he wrotethat,"...both •ms
havebookedgoodorders.They...(will)be busyfor the nexteightor nine
months...Thishasstiffenedthe attitudeof both fzrrns.They alsoknow the
priceswhichwe havebeenquotingandhowfar belowthemtheycansell"
[plattBros.Archives
DDPSL 1/106/37 April23, 1931].
A thixdfactorundermining
thebasisfor corporate
amalgamation
was
thelaxge
difference
in therelative
valuation
of thetwocompanies.
Particularly
vexingwasthedisparity
in perceptions
of thevalueof thefixedassets
(land,
buildings,
factory,machinery,
patterns,
furniture,officeequipment,
and so
forth)of theToyoda
Automatic
LoomWorks.
Toyoda
LoomWorksputthe
value at 1.0 million yen, the AutomaticLoom Works self-valuation
was
1.67millionyen,andBissett's
valuation
wasa fractionover1.2 millionyen.
Furthermore,
the roughcalculations
advanced
by Mitsuito explainthe value
basisof the two Toyodasdrew on the companies'
closelyheld financial
records.
Bissett
wasinitiallyassured
thattheserecords
weregoingto be made
32 / WILLIAM MASS& ANDREW ROBERTSON
availableto him, but the "books"never materialized[Platt Bros. Archives
DDPSL 1/106/37 May 16,31, 1931;Taniguchi,
1992,pp. 114-15].
The largedifferences
in valuationwere an outcomeof dramatically
differentconceptions
of howto justifyvaluedeterminations.
In particular,
the
ToyodaAutomatic
LoomWorkswasnotablefor its lowoperating
capitaland
low profitability
resultingfrom its high development
costs.Therewas no
meansto establish
a cormnonbasisfor dermingthe termsandlevelsof asset
valuations.
As a resulttherewas a largespreadin the participants'
current
capitalization
of the variouscompanies'
expectedfuturerevenuestreams.
Mitsuimanagers
attempted
to serveasintermediaries
in the negotiations,
but
thegapwastoo great.Disagreements
andchanging
assessments
amongMitsui
managers
diffusedits supportandabilityto brokeranyshort-term
resolution.
Meanwhile,
asnegotiations
stretched
on, thechanging
relativecapabilities
and
performances
of themachinery
suppliers
led theMitsuiseniormanagers
most
predisposed
to valuePlatt'scurrentstrengths
to backawayfrom supporting
anymeasures
thatmightinhibitthedevelopment
of theJapanese
firms.
MitsuiBussan,the initiatorof the mergerdiscussions,
wasat the start
more concernedaboutdamaging
its relationship
with Platt Bros.,but the
negotiations
did accomplish
theirgoalof "strengthening
theirtiesto the two
Toyodasin orderto morefullyparticipate
in thedevelopment
of thedomestic
textilemachinery
market"[Taniguchi,
1992,pp.99, 120].Mitsui'spolicyshifts
andrelativefailureto guidethe mergernegotiations
to completionare readily
comprehensible
withinthecontextof developing
Japanese
self-sufficiency
and
exportcompetitiveness
in textilemachinery
production.
Thus,thenegotiations
brokedownbecause
thetwoToyodacompanies
disagreed
abouttheirrespective
marketvaluations,
andboth refusedto open
theirbooksfor theotherandto Platt.The olderToyodacompany
wassecure
with risingsalesto specialized
weavers,
andthe newerToyodacompanywas
beginninga high-wireact in pursuingthe developmentof an automobile
business.
The Toyodas
in effectwithdrewfromnegotiations
by lateMay 1931.
Finally,PlattBros.strategic
orientation
cannotbe adequately
assessed
without linkingthe overlapping
patent and mergernegotiations
with the
simultaneous
formationby the leadingBritishtextilemachineryfLrmsof
TextileMachineryMakers,Ltd. (TMM). The PlattBros.Boardof Directors
approvedtheirparticipation
in the amalgamation
on September
17, 1931.Platt
wroteto Mitsuibeforethe end of the monthexplaining
that futuremerger
proposals
wouldhaveto be putbeforetheTMM board.The letterto Kiichiro
with complaints
aboutthe technology
transferprocessand the requestfor
renegotiation
of the patentlicensefee soonfollowedin November.In the
midstof depressed
trade,the effortsto rationalize
domestic
productionand
curtailpricecompetition
wereaccompanied
by contraction
in the resources
devotedto research
anddevelopment.
Bissett,the directorwho not onlywas
mostactivein assessing
newtechnologies
andthetechnological
capabilities
of
the two Toyodas,but who alsoservedasmanagerof the Experimental
and
Research
Department,
newlyestablished
inJune1928,retiredfromPlattBros.
INNOVATION
IN THE TOYODA ENTERPRISES, 1885-1933/ 33
in November1931 at exactlythe sametime that Platt'scomplaints
forced
renegofiafion
of the Toyodalicensing
fees.AlthoughPlatt laterreneweda
proposal
for mergerin 1933,neithercompany
responded
[PlattBros.Archives,
DDPSL 1/91/5 September
17,24, November4, 1931;1/91/31 June13,1928,
November4, 1931;Taniguchi,1992,pp. 117].
TechnologyTransferfromToyodato Toyota
As noted earlier,before Kh'chirotraveledto Englandin 1929 to
conductthe patentnegotiations
with PlattBros.,he visitedthe leadingloom
manufacturers
in the UnitedStates,Draper and Crompton& Knowles.The
officialandwidelyreportedpurposeof the trip to the U.S.wasto attemptto
sellautomatic
loompatentrightsor at leastto seta pricebasisfor comparison
and negotiation
with Platt. The British-based
headof the textilemachinery
divisionof MitsuiBussan,
FuruichiTsutomu,tellsa differentstory.Awarethat
about70 percentof Americanloomswere alreadyautomaticand that the
remainder
wereweavingclothmoredifficultto adaptto automatic
looms,and
believing
thatToyoda'sasking
priceat doublethePlattlicensing
feewashighly
unrealistic,
Furuichiattemptedto excusehimselffrom the negotiating
effort.
KiichirometwithFuruichiprivately
andexplained
that"theseproceedings
are
not in orderto sellin the UnitedStates...Ientreatyou to comewith us [so]I
can act freely." WhereverFumichi and Kh'chirotraveled,Kh'chirowas
absorbed
in the studyof machinetools.Havingalreadydecidedto attempt
automobilemanufacturing
in Japan,Kiichiro was using the patent rights
negotiations
asa pretextfor hisresearch
[Fumichi,1959a,p. 22].
It is well knownthat,with Sakichi's
blessing,
the feesfromPlattBros.
were to be devoted to developingautomobile-related
research and
development.
Kiichiroleftthepatentnegotiations
to FumichiandotherMitsui
representatives,
andhe spenthistimestudying
machining
andmachinetools,
v/sitingautoassembly
plantsandpartsmanufacturers
in theUnitedStatesand
Britain.Returning
fromhistourin March1930,Kiichiroorganized
a groupof
engineersand began researchon gasolineengineswithin the Toyoda
Automatic
Loom Works.
Simultaneously
with his directionof auto researchand product
development,
Kh'chiroset aboutdeveloping
the company's
capabilities
for
precision
machining
andimproved
massproduction
methods,
prerequisites
for
future automobilemanufacturing.
He introducedthe first assembly
line
conveyer
beltin Japan- for loomassembly
withinToyodaAutomaticLoom
Works.He alsoimportedhigh-quality
GermanandAmericanmachinetools;
he installed
an electricfurnacein the foundryto providehigh-grade
castings;
and he introducedJapan'sfirst moldingmachine.Kiichiro also hired a
chemical
analyst,
andconstructed
the facilities
for chromeplatingin orderto
improvetheprecision
anddurability
of theautomatic
loom'srotatingparts.In
effect,Kh'chiro
wasupgrading
theloommanufacturing
capability
asa testbed
and trainingsitefor developing
automobile
manufacturing
capabilities.
How
34 / WILLIAM MASS & ANDREW ROBERTSON
effectiveandprofitablethesetechniques
werefor loommanufacturing
aswell
is a matterfor futureresearch.
The ToyodaAutomaticLoomWorks,asshown
in Table8, hadmachineordersfar exceeding
its currentproductioncapacity.
Insteadof expanding
to fill existing
orders,Kiichirowasleadinghiscompany
into a high-riskstrategy
to be in on the startof the Japanese
automobile
industry.
Table8,' ToyodaAutomatic
LoomCompany,
OrdersandDeliveries,
1932-1937
(Semi-Annual
Data)
Looms
Spinning
Frames
Untilled
Year
Orders
Deliveries
Orders
Untilled
Orders
Deliveries
Orders
1933
1933
1,043
3,331
1,937
2,096
5,253
6,488
285
645
213
262
702
1,085
1935
1935
1,349
906
2,947
3,437
7,332
4,801
53
399
662
525
1,371
1,245
1937
1937
9,268
1,030
6,459
5,645
26,029
21,414
594
221
504
431
1,718
1,508
In September1933 •c•o
oversaw•e completionof •e T•e A
en•e proto•e. In December•c•o
asked•sab•o to convenean emergencybo•d of •ectors mee•g, where•e boardapproved
the estab•shment
of an AutomobileDepar•ent re=oacfiveto September1, 1933. At an
ex=aor•a• mee•g on Janua• 29, 1934,ToyodaAutomatic•om Works
stoc•oldersvotedto increasethe company's
capita•afionto 3 •on
yen
andto addautomobile
manufac•e andstee•a•g to •e businesses
•stedm
its mcles of mco•orafion.In 1935•e •s•
of Co•erce and Indus•
anno•ced •e plan•at wo•d become•e Law Conce•g •e Manufac•e
of Motor VeNcles,enacted
m May 1936.•e planmadek cle• •at onlya
sma•nmber of domesticautoproducers
wo•d be •owed to compete,each
participant
hamg to passa capaci•h•dle of 20,000cars.•e automobile
depar•ent at •e ToyodaAutomatic•om Workscompleted
its f•st Model
A1 passenger
car proto•e by May 1935, and m Au•st, the company
increased
its capita•afionto 6 •on yenafter•e Cab•et decidedto accept
ß e ou•e
of •e veNcle manufac•e
b•.
•e •st use of the "Toyota"name appearedon the Model •
automobile
developed
m 1936.•e ToyotaMotor Co.,Ltd. wasestab•shed
•th a capitalof 12 •on
yen• Au•st 1937.•sab•o Toyodawaspresidentand •c•o
Toyodawasexecutive
•ce president.
The orgamafional
s•c•e consisted
of seven•ncfion• depaments•clu•g ad•s=afion,
INNOVATION IN THE TOYODA ENTERPRISES, 1885-1933/ 35
sales,manufacturing,
engineering,
andtechnical.
Kiichirowasthe headof the
research
department,
but he wasalsodirecfiyin controlof the "totalvehicle
engineering
administration,"
a department
with responsibility
to improveall
processes
andproducts
in coordination
with the otherdepartments.
Furthermore,the manufacturing
and engineering
departments
wereto work closely
togetherin order to build low-price,high-quality
vehicles;"the respective
managers
of eachdepartment
weregivensimultaneous
managerial
controlof
the other department"[Toyota,1988, p. 67]. The innovativestrategyand
structure
of theToyotaMotor Corporation
continued
for a timeto drawupon
the capabilities
developed
throughthe organizational
experience
of industrial
research,
productdevelopment,
andmanufacturing
at the ToyodaAutomatic
Loom
Works
in addition to the critical new resources Kiichiro
and other
Toyotamanagers
integrated
in orderto "leap"into automobile
production.
Not only did the organizational
capabilities
of ToyodaAutomaticLoom
providea resourceplatformupon whichto attemptanother"leap,"both
technological
and organizational,
but severalproductgenerations
of success
reinforcedthe visionof top managerial
and technicalleadership
orientedto
takeon the challenges
of integrating
industrial
research,
productdevelopment,
andmanufacturing
in a newindustry.
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